originating agents guide...ashley washington, mortgage loan specialist, processing 615-815-2108...
TRANSCRIPT
Originating Agents Guide
JANUARY 2014
Latest Revision: 08/03/20
THDA Originating Agents Guide Page i Revised 08/07/2019
TABLE OF CONTENTS
PART I INTRODUCTION
SECTION 1: THDA Page
1.1 The Guide .................................................................................................................................. 1
1.2 Hours of Operation and Holiday Schedule ............................................................................... 1
1.3 Single Family Program Division Staff Directory ...................................................................... 2
1.4 Current THDA Loan Programs ................................................................................................. 3
Great Choice Loan Program .................................................................................................... 3
Great Choice Plus .................................................................................................................... 4
Homeownership for the Brave ................................................................................................ 5
SECTION 2: ORIGINATING AGENTS
2.1 Originating Agent Working Agreement .................................................................................... 6
2.2 Correspondent Relationships .................................................................................................... 6
2.3 Fees Originating Agent May Earn ............................................................................................ 6
PART II THDA PROGRAM AND CREDIT REQUIREMENTS
SECTION 3: QUALIFYING AN APPLICANT TO PARTICIPATE IN THDA
LOAN PROGRAMS
3.1 Overview ................................................................................................................................... 8
3.2 Acquisition Cost Limits ............................................................................................................ 8
Defining Acquisition Cost ..................................................................................................... 8
Acquisition Cost Inclusions ................................................................................................... 8
Acquisition Cost Exclusions .................................................................................................. 9
Current Acquisition Cost Limits .......................................................................................... 10
3.3 Household Income Limits ....................................................................................................... 11
Defining Household ............................................................................................................. 11
Defining Household Income ................................................................................................ 11
Household Income Inclusions .............................................................................................. 12
Household Income Exclusions ............................................................................................. 13
3.4 Residence Requirement ........................................................................................................... 14
3.5 Three Year Requirement ......................................................................................................... 14
Permitted Ownership Interests ............................................................................................. 14
Prohibited Ownership Interests ............................................................................................ 14
Veteran Exemption .............................................................................................................. 15
3.6 New Mortgage Requirement ................................................................................................... 15
3.7 Targeted Areas ........................................................................................................................ 15
Census Tracts ....................................................................................................................... 16
Current Targeted Areas ........................................................................................................ 17
SECTION 4: OTHER THDA PROGRAM REQUIREMENTS
4.1 Eligible Applicants .................................................................................................................. 18
4.2 Property Eligibility .................................................................................................................. 18
THDA Originating Agents Guide Page ii Revised 11/12/2019
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Eligible Property ................................................................................................................ 18
Appraisals .......................................................................................................................... 20
Acceptable Amount of Land .............................................................................................. 20
4.3 Eligible Loan Types and Terms ........................................................................................... 21
Types of Loans ................................................................................................................... 21
Maximum Loan-To-Value Ratios ...................................................................................... 21
Maximum Loan Amount .................................................................................................... 21
Security .............................................................................................................................. 22
Loan Payment Terms ......................................................................................................... 22
Prepayment Penalty .......................................................................................................... 23
Late Charge ........................................................................................................................ 23
Origination Fee .................................................................................................................. 23
Assumptions ....................................................................................................................... 23
4.4 Federal Recapture .................................................................................................................... 23
SECTION 5: PROCESSING AND CREDIT UNDERWRITING REQUIREMENTS
5.1 Overview ................................................................................................................................. 24
Rates and Rate Lock ............................................................................................................ 24
Disclosures ........................................................................................................................... 24
Underwriting Guidelines, Debt Ratios, Credit Scores, Compensating Factors ................... 24
Homebuyer Education ......................................................................................................... 24
Age of Credit Documents .................................................................................................... 25
Qualifying Spouse ................................................................................................................ 25
Non-Qualifying Spouse ....................................................................................................... 25
Co-Signers ........................................................................................................................... 25
5.2 Assets ...................................................................................................................................... 26
Substantial Liquid Assets ..................................................................................................... 26
Sale of Assets ....................................................................................................................... 26
Gift Letter ............................................................................................................................ 26
5.3 Verifications ............................................................................................................................ 26
Employment Verifications ................................................................................................... 26
Sole Proprietorship Verifications ......................................................................................... 26
Partnership Verifications ..................................................................................................... 26
Limited Partnership Verifications ........................................................................................ 27
Subchapter S Corporation Verifications .............................................................................. 27
Corporation Verifications .................................................................................................... 27
Deposit Verifications ........................................................................................................... 27
Veteran Status ...................................................................................................................... 27
FHA 203(h) Proof of Permanent Residence ........................................................................ 27
FHA 203(h) Proof of Destruction of Residence .................................................................. 27
5.4 Debts, Obligations and Other Expenses .................................................................................. 28
Remaining Debt Payments ................................................................................................... 28
Bankruptcy (Chapter 7 and Chapter 13) .............................................................................. 28
Previous Default .................................................................................................................. 28
Child Support and Alimony Obligations ............................................................................. 28
Judgments ............................................................................................................................ 28
Federal or State Tax Liens, Tax Arrearages ........................................................................ 28
Collections ........................................................................................................................... 28
Co-Signed Debt .................................................................................................................... 28
Child Care Expense.............................................................................................................. 28
Gift Letter ............................................................................................................................ 28
Legally Enforceable Obligation Letter ................................................................................ 28
Establishing / re-establishing Credit .................................................................................... 28
THDA Originating Agents Guide Page iii Revised 08/27/2019
PART III PROCEDURES
SECTION 6: SUBMITTING AN APPLICATION FILE TO THDA Page
6.1 Overview ................................................................................................................................. 29
6.2 Required Documents ............................................................................................................... 29
Underwriting Submission Checklist .................................................................................... 29
Buyer Profile ........................................................................................................................ 29
Application Affidavit ........................................................................................................... 29
Veteran Exemption Application Affidavit ........................................................................... 29
Seller Affidavit .................................................................................................................... 29
Tax Returns .......................................................................................................................... 29
Notice to Applicants Federal Recapture Requirements ....................................................... 30
Grants/Downpayment Assistance Approval Letters ............................................................ 30
Transmittal Summary (Conventional and USDA/RD) ........................................................ 30
Insurance/Guaranty Approval .............................................................................................. 30
Loan Application (1003) ...................................................................................................... 31
Positive Identification .......................................................................................................... 31
Credit Report ........................................................................................................................ 31
Final Divorce Decree/Marital Dissolution; Court Ordered Child
Support; SSI or Other Assistance ..................................................................................... 31
Verification of Employment; Most Recent Pay Stub; Form Evidencing
Telephone Verification of Prior Employment; Self Employment .................................... 31
Documentation for Veteran Exemption ............................................................................... 31
Original Certificate of Title or Original Manufactured Certificate of Origin ...................... 31
Verification of Deposit or Bank Statements for Previous Two Months .............................. 31
Sales Contract ...................................................................................................................... 32
FHA Conditional Commitment ............................................................................................ 32
Appraisal .............................................................................................................................. 32
Flood Notification ............................................................................................................... 32
Loan Estimate ...................................................................................................................... 32
Title Commitment ................................................................................................................ 32
Hazard Insurance ................................................................................................................. 32
6.3 Documenting New Construction for Custom Built Homes ..................................................... 32
Documentation Required ..................................................................................................... 32
Manufactured Housing......................................................................................................... 32
Borrower Obtains Construction Loan .................................................................................. 33
6.4 THDA Underwriting Decisions .............................................................................................. 33
THDA Underwriting Results ............................................................................................... 33
Rejections ............................................................................................................................. 33
Re-Submissions ................................................................................................................... 33
6.5 Commitments .......................................................................................................................... 33
Application Approval ........................................................................................................... 33
Commitment Term ............................................................................................................... 33
Commitment Conditions ...................................................................................................... 34
Satisfying THDA Commitment Conditions ......................................................................... 34
Update of Application or Commitment ............................................................................... 34
Loan Amount or Program Type Changes ............................................................................ 34
Commitment Delivery ......................................................................................................... 35
Voided Commitments .......................................................................................................... 35
THDA Originating Agents Guide Page iv Revised 07/15/2019
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6.6 Funding THDA Loans ............................................................................................................. 36
Funding Method ................................................................................................................... 36
6.7 Additional Information ............................................................................................................ 36
Scheduling Loan Closings ................................................................................................... 36
Change of Property .............................................................................................................. 36
Change in Employment ........................................................................................................ 36
SECTION 7: CLOSING A THDA LOAN
7.1 Overview ................................................................................................................................. 37
Faxed Notes ......................................................................................................................... 37
Expedite Loan Documents ................................................................................................... 37
7.2 Loan Commitment .................................................................................................................. 37
7.3 Required Loan Documents ...................................................................................................... 37
Loan Documents .................................................................................................................. 37
Due Dates ............................................................................................................................. 38
Late Charges ........................................................................................................................ 38
7.4 Other Required Documentation .............................................................................................. 38
Title Insurance Policy .......................................................................................................... 38
Warranty Deed ..................................................................................................................... 39
Termite Inspection/Treatment Certificate ............................................................................ 39
Hazard Insurance ................................................................................................................. 39
Flood Insurance .................................................................................................................... 39
Escrow for Repairs or Completion of Construction ............................................................. 40
Closing disclosure ................................................................................................................ 40
Verbal Verification of Employment (VVOE) ...................................................................... 40
7.5 Other Requirements ................................................................................................................ 40
Close In The Name Of ......................................................................................................... 40
Qualifying Spouse ................................................................................................................ 41
Rescission ............................................................................................................................ 41
Net Funds “To Borrower” .................................................................................................... 41
Original Certificate of Title or Original Manufactured Certificate of Origin ..................... 41
Affidavit of Affixation (Manufactured Home) .................................................................... 41
Warranty Deed ..................................................................................................................... 41
7.6 Closing Costs .......................................................................................................................... 41
Closing Costs and Fees a THDA Borrower May Pay .......................................................... 41
7.7 Use of MERS System .............................................................................................................. 42
SECTION 8: SHIPPING A CLOSED THDA LOAN
8.1 Overview ................................................................................................................................. 43
Originating Agent Obligations ............................................................................................. 43
Document Caption ............................................................................................................... 43
Shipping Address ................................................................................................................. 43
8.2 Delivery Deadlines .................................................................................................................. 43
8.3 Failure To Meet Delivery Deadlines ....................................................................................... 44
THDA Originating Agents Guide Page v Revised 07/01/2020
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8.4 Required Documents For A Complete Closed Loan File ........................................................ 44
Closed Loan Submission Checklist ..................................................................................... 44
Request For Loan Purchase with Acknowledgement and Certification .............................. 44
Commitment ........................................................................................................................ 45
Original Note ...................................................................................................................... 45
Deed of Trust ....................................................................................................................... 45
Affidavit of Affixation ......................................................................................................... 45
Assignment .......................................................................................................................... 45
Title Insurance Policy/Endorsements................................................................................... 45
Warranty Deed ..................................................................................................................... 46
Closing Disclosure ............................................................................................................... 46
Hazard Insurance ................................................................................................................. 46
Termite Inspection/Treatment Certificate ............................................................................ 46
Flood Insurance .................................................................................................................... 46
Commitment Conditions ...................................................................................................... 46
MIC/LGC; USDA/RD 1980-17, or as Applicable ............................................................... 47
Final Loan Application (1003) ............................................................................................. 47
8.5 Loan Repurchase ..................................................................................................................... 47
Repurchase Obligation ......................................................................................................... 47
Repurchase Price .................................................................................................................. 48
Repurchase Procedure .......................................................................................................... 48
8.6 Servicing Procedures ............................................................................................................... 48
Service Release Premium .................................................................................................... 48
Tax Service Fee ................................................................................................................... 49
Changing Fees/Compensation ............................................................................................. 49
Tax and Insurance Escrow ................................................................................................... 49
Volunteer Mortgage Loan Servicing Directory ................................................................... 49
Payments Received After Purchase .................................................................................. 49-b
Payments Received Prior to Purchase ............................................................................... 49-b
Service Transfer After First Payment Due Date ............................................................... 49-b
PART IV ADDITIONAL INFORMATION
SECTION 9: THDA FORMS AND INSTRUCTIONS
Application Affidavit (HO-0450) .......................................................................................... 50
Veteran Exemption Application Affidavit (HO-0460) .......................................................... 50
Notice to Applicants Federal Recapture Requirements (HO-0448)........................................... 51
Seller Affidavit (HO-0451) .............................................................................................................. 51
Buyer Profile (HO-0439) ................................................................................................................. 51
Underwriting Submission Checklist (HO-0549) .......................................................................... 51
Affidavit of Affixation (HO-0453) ........................................................................................ 52
Legally Enforceable Obligation Letter (HO-0476) .............................................................. 52
Closed Loan Submission Checklist (HO-0541) ............................................................................ 52
THDA Rider (HO-0440) .................................................................................................................. 52
Request for Loan Purchase with Acknowledgement
and Certification (HO-0444) .................................................................................................... 52
THDA Originating Agents Guide Page 1 Revised 11/12/2019
SECTION 1: THDA
THE GUIDE
This Originating Agents Guide amends and replaces the Originating Agents Guide dated September
2004 (the “Prior Guide”) and, together with all subsequent revisions, modifications or updates (the “Guide”)
provided by the Tennessee Housing Development Agency (“THDA”), contains information about THDA
loan programs and specific requirements for qualifying applicants, submitting, closing and delivering loans
for THDA. The Prior Guide shall apply to all THDA approved loans closed on or prior to September 30,
2013, and this Guide shall apply to all THDA approved loans closed on or after October 1, 2013.
THDA may revise, modify or update this Guide from time to time and will notify Originating
Agents of such changes. THDA may provide notice of changes by posting such changes to it web site at
www.thda.org.
1.2 HOURS OF OPERATION AND HOLIDAY SCHEDULE
The Single Family Programs Division hours of operation are 6:30 a.m. until 4:30 p.m. Central
Time, Monday through Friday. Rate lock desk is available 9;00 a.m. until 4:30 p.m. Central time on all
THDA business days. The Single Family Programs Division will be closed on official State holidays which
are as follows:
New Year’s Day
Martin Luther King Day
Presidents’ Day
Good Friday
Memorial Day
Independence Day
Labor Day
Columbus Day*
Veteran’s Day
Thanksgiving Day
Christmas Day**
* This holiday may be exchanged for a holiday on the Friday after Thanksgiving.
**Other holidays around Christmas may be announced later.
1.3 SINGLE FAMILY PROGRAMS DIVISION STAFF DIRECTORY
The Single Family Programs Division of THDA has day-to-day operational control of the
origination and closing of THDA mortgage loans. All correspondence should be directed to:
Single Family Programs Division
Tennessee Housing Development Agency
502 Deaderick Street
Third Floor
Nashville, TN 37243
Any interested person may receive a packet of general information concerning THDA loan
programs by leaving their name and address on the Single Family Programs General Information line (see
below) or on the THDA toll-free (TN) message line: 1-800-228-8432. Information is also available on the
THDA website at www.thda.org.
THDA Originating Agents Guide Page 2 Revised 07/01/2020
Single Family General Information ............... 615-815-2100
Toll-Free Voice Mail ..................................... 1-800-228-8432
Email General Information ............................ [email protected]
Staff Telephone Email Address
Lindsay Hall, Chief Operating Officer of Single Family Programs 615-815-2080 [email protected]
Rhonda Ronnow, Director of Loan Operations, Single Family Programs 615-815-2111 [email protected]
Nancy Herndon, Assistant to Director of Loan Operations 615-815-2101 [email protected]
Rhonda Ellis, Mortgage Loan Specialist, Processing 615-815-2103 [email protected]
Ashley Washington, Mortgage Loan Specialist, Processing 615-815-2108 [email protected]
Tikisha Wilson, Program Development Coordinator 615-815-2102 [email protected]
Sarah Sisler, Mortgage Underwriting Manager 615-815-2073 [email protected]
Pam Norris, Underwriter 615-815-2087 [email protected]
Tammy Walker, Underwriter 615-815-2091 [email protected]
Lynne Walls, Underwriter 615-815-2089 [email protected]
Stephen Chinique, Underwriter 615-815-2107 [email protected]
Kelly Murph, Underwriter 615-815-2099 [email protected]
Chuck Pickering, Mortgage Funding Manager 615-815-2086 [email protected]
Caroline Rhodes, Mortgage Loan Closing Manager 615-815-2098 [email protected]
Shannon Ward, Mortgage Loan Coordinator, Closing 615-815-2084 [email protected]
Terry Benier, Mortgage Loan Specialist, Closing 615-815-2048 [email protected]
Katina Brewer, Mortgage Loan Specialist, Closing 615-815-2083 [email protected]
Tracy Falk, Mortgage Loan Specialist, Closing 615-815-2096 [email protected]
Tracey Young, Mortgage Loan Specialist, Closing 615-815-2085 [email protected]
Jayna Johnson, Homebuyer Education Manager 615-815-2019 [email protected]
Mandy Garman, HBEI Training & Intake Coordinator 615-815-2161 [email protected]
Yvonne Hall, HBEI Payments & Reporting Coordinator 615-815-2228 [email protected]
Kendra Love, HUD Housing Education Counseling Coordinator-West TN 615-815-2138 [email protected]
Montrice Brown-Miller, HUD Housing Education Counseling-Middle TN 615-815-2137 [email protected]
Russell Catron, HUD Housing Education Counseling Coordinator-East TN 615-815-2088 [email protected]
Debbie Reeves, Real Estate Industry Advisor 615-815-2152 [email protected]
Josh McKinney, Real Estate Industry Advisor 615-815-2158 [email protected]
Darrell Robertson, Asst. Director, Industry & Government Affairs 615-815-2077 [email protected]
Toumie Parrot, Customer Account Manager Middle Tennessee 615-815-2122 [email protected]
Rebekah Bicknell, Customer Account Manager East Tennessee 615-815-2121 [email protected]
Ella Harris, Customer Account Manager West Tennessee 615-815-2095 [email protected]
THDA Originating Agents Guide Page 3 Revised 07/01/2020
1.4. CURRENT THDA LOAN PROGRAMS
A. Great Choice Loan Program
This program is designed for low and moderate income borrowers. . Great Choice offers a low interest rate
loan secured by a first mortgage with the option of down payment and closing cost assistance to a maximum
of $7,500 at an interest rate that is the same as the first mortgage rate, monthly payments amortized over 15
years, secured by a second deed of trust. THDA allows the following loan types: FHA, USDA, and VA at
the maximum loan limits based on insurer or guarantors guidelines. THDA also allows conventional
uninsured loans with a maximum loan to value of 78%.
Maximum Household Income Varies by county
Maximum Acquisition Cost
(Including all incidentals) Varies by county
Maximum LTV Subject to FHA, VA, and USDA/RD Guidelines. Conventional Loans
78% LTV or less.
Interest Rate 3.50% fixed rate, subject to change
Loan Term 30 years
Loan Types FHA, VA, USDA/RD, Conventional
Mortgage Insurance or Guarantee As required by loan type
Buydowns Not allowed
Assumable Subject to qualifying
Pre-Payment Penalty No penalty
Subject to Recapture Yes
Required Reserve As required by loan type
Minimum Investment As required by loan type
Closing Costs May come from borrower, seller, a gift,
or as required by loan type
Down Payment As required by loan type
First Time Homebuyer Rule
Borrower must not have an interest in their primary residence within 36
months of application unless the property to be financed with the loan is
in a targeted area or the borrower meets the Veteran’s exemption. (See
THDA website for targeted areas.)
Homebuyer Education Required
Origination Fee Cannot be charged
Lender Compensation 1.75% at time of loan purchase, 1% SRP
THDA Originating Agents Guide Page 4 Revised 07/01/2020
B. Great Choice Plus: Down Payment/Closing Cost Assistance Loan
This loan offers down payment and closing cost assistance to first-time homebuyers at a low interest rate
but secured by a second deed of trust. This loan is available only with the THDA Great Choice first
mortgage loan. The Great Choice Plus loan is at an interest rate the same as the first mortgage, monthly
payments amortized over a 15 year term, and a second lien.
Eligible Borrower Homebuyer obtaining THDA Great Choice Loan
Maximum Household Income THDA Great Choice Program Limits apply
Maximum Loan Amount Sales price less than $150,000, second mortgage loan
amount equals $6,000
Sales price equal to or more than $150,000, second
mortgage loan amount equals $7,500
Interest Rate Same as first mortgage
Loan Term 15 years
Underwriting Criteria
Borrowers must have 640 minimum credit score.
Must meet all other THDA Underwriting
Guidelines. Manual underwriting allowed per
THDA guide.
Pre-Payment The Great Choice Plus loan is due in full upon 1st
mortgage payoff, assumption, or refinance. No assumption of Great Choice Plus allow e d, with the exception of a VA assum ption.
Allowable Fees Recording fee and odd days interest
Closing Documents FNMA/FHLMC Multi-state Note and Deed of Trust in the
name of the Originating Agent
Homebuyer Education
Required prior to closing on THDA Great Choice Plus
Servicing Volunteer Mortgage Loan Servicing
THDA Originating Agents Guide Page 5 Revised 01/25/2016
C. THDA Veterans Homeownership for the Brave Loan Program
This loan program offers a below market interest rate to qualified members of the United States military,
National Guard, Veterans and some spouses. A 50 basis point rate reduction will apply to the Great Choice,
based on the current rate at time of loan submission.
THDA Veterans Homeownership for the Brave Program
Maximum Loan Amount Not to exceed current THDA acquisition limits
Purchase product only Refinance and second liens ineligible
Maximum LTV Subject to FHA, VA, and USDA/RD Guidelines. Conventional Loans 78% LTV or less.
Underwriting guidelines
FHA, VA, USDA, and Conventional underwriting guidelines through D.U. apply
except as modified by THDA product guidelines. Manual Underwriting acceptable
with no credit score available.
Eligible Borrowers
All Veterans
Active Duty Military (including those in their first tour of duty)
Retired Military
Active Duty Reservists or Reservists who have served 180 days or more active duty
If discharged or release was done so under conditions other than dishonorable
Spouse of Veteran or Surviving Spouse of Veteran
Income
Borrower’s income must not exceed THDA current income limits per county.
Income will be calculated based on THDA current income guidelines. Borrower
must provide a DD-214 or most recent enlistment papers along with the most
recent LES for active duty military
First Time Homebuyer Rule
First Time Homebuyer Rule does not apply:
to "veterans" as defined in 38 U.S.C. Section 101, so long as the veteran did not
previously receive a bond finance mortgage under this exception and, generally,
includes anyone (a) who has served in the military and has been released under
conditions other than dishonorable or (b) who has re-enlisted, but could have been
discharged or released under conditions other than dishonorable.
Minimum FICO requirement 640
Maximum Debt to Income ratio 45%
Manual Underwriting
Income will be calculated based on current THDA guidelines. Borrower(s) with no
credit scores may be manually underwritten using non-traditional credit guidelines
in accordance with FHA, VA, and USDA/RD requirements to include those loans
with an FHA Scorecard with a decision response of Refer/Eligible if the decision
clearly states “No Score”. If there are other risk factors stated other than “No
Score”, THDA will not accept the loan application. See additional guidelines.
Eligible Property 1 unit single family residence, townhouse or condo
Occupancy Borrower/Co-borrower must occupy the property as their primary residence.
Downpayment Required downpayment is based on FHA, VA or USDA program guidelines. The required downpayment for Conventional loans is 22%.
Homebuyer Education Required prior to closing
Escrows Escrow waivers are not permitted. Escrow for taxes and insurance is required
THDA Originating Agents Guide Page 6 Revised 07/01/2020
SECTION 2: ORIGINATING AGENTS
2.1 ORIGINATING AGENT WORKING AGREEMENT
The written agreement between an Originating Agent and THDA, which must be executed before
any loan applications will be accepted by THDA for processing (the “Working Agreement”), contains the
basic contractual agreements between the Originating Agent and THDA. The Working Agreement sets
forth general terms under which the Originating Agent is authorized to act on behalf of THDA. The
Working Agreement also incorporates the contents of this Guide, prior guides, and other written instructions
that may be issued by THDA to provide instruction and direction in the daily operation of THDA’s
programs.
2.2 CORRESPONDENT RELATIONSHIPS
Each Originating Agent is responsible for the documents submitted to THDA in loan application
files, closed loan packages or otherwise. Applications that are originated by a third party and/or brokered
applications, are eligible to be submitted to THDA upon written approval of THDA.
Applications originated by one Originating Agent that are transferred to another Originating Agent
for submission to THDA must be re-verified in the receiving Originating Agent’s name prior to submission
to THDA.
The Originating Agent who originated, processed, closed, insured and delivered a particular loan
to THDA must directly assign the Deed of Trust securing the loan to THDA. Insurance or guaranty
certificates may not contain the name of any entity other than the Originating Agent or THDA as the
beneficiary of the insurance or guaranty.
In THDA’s sole discretion, THDA may permit a HUD-approved underwriting relationship between
an Originating Agent and another lender solely for the purpose of FHA Direct Endorsement underwriting
if an Originating Agent does not have an FHA Direct Endorsement Underwriter on staff. To request
THDA’s approval prior to the submission of any loan application to THDA, submit a copy of the
appropriate HUD approval of the underwriting relationship. The Originating Agent is responsible for
originating, processing, closing, submitting for insurance or guaranty, delivering the loan to THDA and
providing all necessary follow-up documentation.
Each of these policies may be waived or exceptions may be granted on a case-by-case basis, in
THDA’s sole discretion. Requests for any waiver or exception under this Section 2.2 must be submitted in
writing to THDA prior to submission of any loan application or applications to which the waiver or
exception applies. In the event THDA denies a request for a waiver or an exception under this Section 2.2,
THDA will not accept any loan application or applications for processing to which the waiver or exception
applies.
2.3 FEES ORIGINATING AGENT MAY EARN
Originating Agents may earn the following fees in connection with THDA loans:
1. Origination Fee may not be charged by the lender. THDA will pay a lender compensation
at the time of loan purchase by THDA in an amount equal to 1.75% of the loan amount.
THDA Originating Agents Guide Page 7
Revised 07/01/2020
2. Normal and Customary Fees – including, without limitations, appropriate application fee.
Either Applicant or Seller may pay fees. Loan Estimate and Closing Disclosure should not
list any fees payable to THDA. However, Section A, Page 2 of the Loan Estimate/Closing
Disclosure cannot exceed $1,400 for all Origination Charges.
3. Service Release Fee - The amount depends on the agreement between Originating Agent
and an approved THDA Servicer in connection with the sale of servicing. This agreement
must be in writing, fully executed, and approved by THDA before a Commitment can be
issued by THDA. Servicing can only be sold directly to an approved THDA Servicer.
4. Interest - For loans closed by the Purchase Method, an Originating Agent may retain per
diem interest at the note rate for the number of days Originating Agent holds the loan prior
to purchase by THDA.
REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY
THDA Originating Agents Guide Page 8 Revised 04/07/2015
SECTION 3: QUALIFYING AN APPLICANT
TO PARTICIPATE IN THDA LOAN PROGRAMS
3.1 OVERVIEW
Before undertaking the typical underwriting process for a proposed THDA loan, first determine
whether the Applicant is eligible to participate in the desired THDA loan program. See Section 1.4 for a
description of THDA loan programs. If the Applicant does not meet the basic program requirements
described in this Section, do not submit the application file to THDA. If the Applicant does not meet the
basic program requirements described in this Section, THDA cannot approve the application.
THDA program eligibility requires the following determinations:
1. Determine whether the property is within the applicable Acquisition Cost Limit. See
Section 3.2.
2. Determine whether the Applicant’s Household Income is within the applicable Income
Limits. See Section 3.3 for information about defining and calculating Household Income.
3. Determine whether the Applicant meets the Residence Requirement. See Section 3.4.
4. Determine whether the Applicant meets the Three Year Requirement. See Section 3.5 and
3.7.
5. Determine whether Applicant meets the New Mortgage Requirement. See Section 3.6.
6. Determine whether Applicant is a U.S. citizen or permanent resident alien.
If all of these requirements are not met, do not submit the application file to THDA.
3.2 ACQUISITION COST LIMITS
A. Defining Acquisition Cost
Property to be financed with a THDA loan cannot be purchased for an amount that exceeds the
applicable Acquisition Cost Limit. Generally, the Acquisition Cost is the total cost of acquiring the property
as a completed residential unit.
Usually, the Acquisition Cost is the price specified in the contract between the seller and Applicant
for the property, so long as there are no other agreements (written or verbal) for payment of any additional
amounts in connection with the purchase or construction of the property. If there are agreements of any
kind in addition to the purchase contract, then the Acquisition Cost also includes all other amounts paid in
cash or in kind by the Applicant or on behalf of the Applicant in connection with the property.
B. Acquisition Cost Inclusions
Include the following items in determining Acquisition Cost:
1. The price indicated in an executed sales contract for a proposed, new or existing house and
lot that will be conveyed to the Applicant when the THDA loan is closed (“house” includes
a manufactured home on a permanent foundation);
THDA Originating Agents Guide Page 9 January 2014
2. The price or total cost to construct a house on a lot owned by the Applicant;
3. The amount paid by the Applicant for an unimproved lot less than two years before the date of loan
application upon which a residence will be (or has recently been) built;
4. The cost of necessary repairs to the residence that are not included in the sales contract;
5. The cost for fixtures that are not included in the sales contract;
6. The cost of all materials and labor needed to complete or renovate the residence that are not included in the
sales contract;
7. Any other cash or in-kind contributions paid by or on behalf of the Applicant to or for the seller;
8. Any other cash or in-kind contributions paid by or on behalf of the seller to or for Applicant;
9. The portion of settlement and financing costs that exceed usual and reasonable amounts.
C. Acquisition Cost Exclusions
Do not include the following items in determining Acquisition Cost:
1. The amount paid by the Applicant for an unimproved lot more than two years before the date of application
upon which the subject residence will be (or has recently been) built;
2. The cost for personal property that is not included in the contract for sale;
3. The imputed cost (sweat equity) of Applicant's labor and/or the labor of the Applicant's immediate family
members;
4. Loan points paid by the seller;
5. Usual and reasonable settlement and financing costs.
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Page 10 THDA Originating Agents Guide Revised 08/03/2020
D. Current Acquisition Cost and Income Limits County
Acquisition Cost Limits
Household Income Limits Acquisition Cost
Limits
Household Income Limits 1-2 3 + 1-2 3 +
Counties Persons Persons Counties Persons Persons Anderson $250,000 $73,900 $76,820 Lewis $250,000 $66,800 $76,820
Bedford $250,000 $66,800 $77,280 Lincoln T $300,000 $80,160 $93,520
Benton $250,000 $66,800 $76,820 Loudon $300,000 $73,900 $84,985
Bledsoe $300,000 $66,800 $76,820 Macon T $375,000 $80,160 $93,520
Blount $250,000 $73,900 $84,985 Madison * $300,000 $71,399 $82,109
Bradley * $250,000 $71,039 $81,695 Marion $300,000 $72,600 $83,490
Campbell T $300,000 $80,160 $93,520 Marshall $250,000 $70,320 $82,040
Cannon T $375,000 $98,760 $115,220 Maury $375,000 $83,760 $97,720
Carroll T $300,000 $80,160 $93,520 McMinn $250,000 $66,800 $76,820
Carter $250,000 $69,000 $80,500 McNairy $300,000 $66,800 $76,820
Cheatham $375,000 $98,760 $115,220 Meigs T $300,000 $80,160 $93,520
Chester $300,000 $71,399 $82,109 Monroe T $300,000 $80,160 $93,520
Claiborne T $300,000 $80,160 $93,520 Montgomery * $250,000 $70,179 $80,706
Clay $300,000 $66,800 $76,820 Moore $250,000 $70,179 $80,706
Cocke T $300,000 $80,160 $93,520 Morgan T $300,000 $80,160 $93,520
Coffee * $250,000 $71,159 $81,833 Obion $300,000 $66,800 $76,820
Crockett T $300,000 $80,160 $93,520 Overton T $300,000 $80,160 $93,520
Cumberland $250,000 $66,800 $76,820 Perry $250,000 $66,800 $76,820
Davidson * $375,000 $98,760 $115,220 Pickett T $300,000 $80,160 $93,520
Decatur $250,000 $66,800 $76,820 Polk T $300,000 $80,160 $93,520
DeKalb T $300,000 $80,160 $93,520 Putnam $250,000 $67,800 $79,100
Dickson $375,000 $98,760 $115,220 Rhea T $300,000 $80,160 $93,520
Dyer T $300,000 $80,160 $93,520 Roane $250,000 $70,659 $81,258
Fayette T $300,000 $81,480 $95,060 Robertson * $375,000 $98,760 $115,220
Fentress T $300,000 $80,160 $93,520 Rutherford * $375,000 $98,760 $115,220
Franklin T $300,000 $80,160 $93,520 Scott T $300,000 $80,160 $93,520
Gibson T $300,000 $80,160 $93,520 Sequatchie $300,000 $72,600 $83,490
Giles $300,000 $68,760 $80,220 Sevier $250,000 $69,840 $81,480
Grainger T $300,000 $80,160 $93,520 Shelby * $250,000 $69,739 $80,200
Greene T $300,000 $80,160 $93,520 Smith $375,000 $67,440 $78,680
Grundy T $300,000 $80,160 $93,520 Stewart T $300,000 $80,160 $93,520
Hamblen * $250,000 $66,800 $77,560 Sullivan * $250,000 $70,920 $82,224
Hamilton * $250,000 $72,600 $83,490 Sumner $375,000 $98,760 $115,220
Hancock T $300,000 $80,160 $93,520 Tipton T $300,000 $81,480 $95,060
Hardeman T $300,000 $80,160 $93,520 Trousdale T $375,000 $98,760 $115,220
Hardin $300,000 $66,800 $76,820 Unicoi $300,000 $69,000 $80,500
Hawkins T $300,000 $80,160 $93,520 Union T $300,000 $88,680 $103,460
Haywood T $300,000 $80,160 $93,520 Van Buren T $300,000 $80,160 $93,520
Henderson T $300,000 $80,160 $93,520 Warren $250,000 $66,800 $76,820
Henry * $250,000 $66,800 $76,820 Washington * $250,000 $69,000 $80,500
Hickman $375,000 $66,800 $76,820 Wayne $300,000 $66,800 $76,820
Houston T $300,000 $80,160 $93,520 Weakley * $250,000 $66,800 $76,820
Humphreys $250,000 $66,800 $76,820 White T $300,000 $80,160 $93,520
Jackson T $300,000 $80,160 $93,520 Williamson $375,000 $98,760 $115,220
Jefferson T $300,000 $80,160 $93,520 Wilson $375,000 $98,760 $115,220
Johnson T $300,000 $80,160 $93,520 T Denotes a targeted county. The first–time homebuyer requirement is waived.
* Denotes that some census tracts in the county are targeted, and in thesecensus tracts, the first–time homebuyer requirement is waived.
Knox * $250,000 $73,900 $84,985
Lake T $300,000 $80,160 $93,520 Lauderdale T $250,000 $80,160 $93,520 Lawrence T $250,000 $80,160 $93,520
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D. Current Acquisition Cost and Income Limits County
Acquisition Cost Limits
Household Income Limits Acquisition Cost Limits
Household Income Limits 1-2 3 + 1-2 3 +
Counties Persons Persons Counties Persons Persons Anderson $250,000 $69,900 $80,385 Lewis $250,000 $64,500 $74,175
Bedford $250,000 $64,500 $74,620 Lincoln T $300,000 $77,400 $90,300
Benton $250,000 $64,500 $74,175 Loudon $300,000 $69,900 $80,385
Bledsoe $300,000 $64,500 $74,175 Macon T $375,000 $77,400 $90,300
Blount $250,000 $69,900 $80,385 Madison * $300,000 $66,840 $77,980
Bradley * $250,000 $68,224 $78,458 Marion $300,000 $67,800 $77,970
Campbell T $300,000 $77,400 $90,300 Marshall $250,000 $68,040 $78,688
Cannon T $375,000 $96,000 $112,000 Maury $375,000 $77,640 $90,580
Carroll T $300,000 $77,400 $90,300 McMinn $250,000 $64,500 $74,175
Carter $250,000 $64,680 $75,460 McNairy $300,000 $64,500 $74,175
Cheatham $375,000 $96,000 $112,000 Meigs T $300,000 $77,400 $90,300
Chester $300,000 $66,840 $77,980 Monroe T $300,000 $77,400 $90,300
Claiborne T $300,000 $77,400 $90,300 Montgomery * $250,000 $67,584 $77,722
Clay $300,000 $64,500 $74,175 Moore $250,000 $67,404 $77,515
Cocke T $300,000 $77,400 $90,300 Morgan T $300,000 $77,400 $90,300
Coffee * $250,000 $68,224 $78,458 Obion $300,000 $64,500 $74,175
Crockett T $300,000 $77,400 $90,300 Overton T $300,000 $77,400 $90,300
Cumberland $250,000 $64,500 $74,175 Perry $250,000 $64,500 $74,175
Davidson * $375,000 $96,000 $112,000 Pickett T $300,000 $77,400 $90,300
Decatur $250,000 $64,500 $74,175 Polk T $300,000 $77,400 $90,300
DeKalb T $300,000 $77,400 $90,300 Putnam $250,000 $66,120 $77,140
Dickson $375,000 $96,000 $112,000 Rhea T $300,000 $77,400 $90,300
Dyer T $300,000 $77,400 $90,300 Roane $250,000 $67,764 $77,929
Fayette T $300,000 $79,080 $92,260 Robertson * $375,000 $96,000 $112,000
Fentress T $300,000 $77,400 $90,300 Rutherford * $375,000 $96,000 $112,000
Franklin T $300,000 $77,400 $90,300 Scott T $300,000 $77,400 $90,300
Gibson T $300,000 $77,400 $90,300 Sequatchie $300,000 $67,800 $77,970
Giles $300,000 $64,680 $75,460 Sevier $250,000 $66,720 $77,840
Grainger T $300,000 $77,400 $90,300 Shelby * $250,000 $66,584 $76,572
Greene T $300,000 $77,400 $90,300 Smith $375,000 $67,440 $78,680
Grundy T $300,000 $77,400 $90,300 Stewart T $300,000 $77,400 $90,300
Hamblen * $250,000 $66,800 $77,560 Sullivan * $250,000 $66,120 $77,140
Hamilton * $250,000 $67,800 $77,970 Sumner $375,000 $96,000 $112,000
Hancock T $300,000 $77,400 $90,300 Tipton T $300,000 $79,080 $92,260
Hardeman T $300,000 $77,400 $90,300 Trousdale T $375,000 $96,000 $112,000
Hardin $300,000 $64,500 $74,175 Unicoi $300,000 $64,680 $75,460
Hawkins T $300,000 $77,400 $90,300 Union T $300,000 $83,880 $97,860
Haywood T $300,000 $77,400 $90,300 Van Buren T $300,000 $77,400 $90,300
Henderson T $300,000 $77,400 $90,300 Warren $250,000 $64,500 $74,175
Henry * $250,000 $64,500 $74,175 Washington * $250,000 $64,680 $75,460
Hickman $375,000 $64,500 $74,175 Wayne $300,000 $64,500 $74,175
Houston T $300,000 $77,400 $90,300 Weakley * $250,000 $66,800 $76,820
Humphreys $250,000 $66,800 $76,820 White T $300,000 $77,400 $90,300
Jackson T $300,000 $77,400 $90,300 Williamson $375,000 $96,000 $112,000
Jefferson T $300,000 $77,400 $90,300 Wilson $375,000 $96,000 $112,000
Johnson T $300,000 $77,400 $90,300 T Denotes a targeted county. The first–time homebuyer requirement is waived.
* Denotes that some census tracts in the county are targeted, and in thesecensus tracts, the first–time homebuyer requirement is waived.
Knox * $250,000 $69,900 $80,385
Lake T $300,000 $77,400 $90,300 Lauderdale T $250,000 $77,400 $90,300 Lawrence T $250,000 $77,400 $90,300
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3.3 HOUSEHOLD INCOME LIMITS
A. Defining Household
1. Household Includes
A household, for purposes of determining eligibility for THDA loan programs, includes all
persons 18 years of age or older and all minors who will live in the property to be acquired
with the THDA loan and any spouse who is absent or separated, regardless of whether they
intend to occupy the property.
2. Accuracy of Household Composition
Although not a critical issue in other sources of financing, the accuracy of household
composition must be determined for purposes of establishing total Household Income. If
the Originating Agent becomes aware, at or prior to closing, that the household
composition may differ from the composition first proposed, documentation must be
corrected and submitted to THDA. Examples include the contemplated marriage of an
Applicant, or the existence of a fiancé, relative or friend who intends to occupy the
property.
If the Originating Agent becomes aware that a relative, a friend or fiancé intends to occupy
the property, obtain supporting evidence of income for each such person.
3. Separated Applicant
A separated Applicant must be treated as married, and the Applicant, together with the
Applicant's separated spouse, must meet all THDA program requirements. A separation
agreement is not sufficient to waive this requirement. The Applicant and the Applicant's
separated spouse must sign the Deed of Trust (as a minimum) at loan closing, so that the
marital rights of the separated spouse in the property are encumbered by the Deed of Trust.
A separated spouse who will not occupy or take title to the property must furnish, at a
minimum, a current pay stub with verification of hire date and their previous year’s Federal
Income Tax Return, so that an accurate determination of Household Income can be made.
Depending on the length of separation, up to three years’ federal income tax returns could
be required.
4. Expected Childbirth
Do not include an unborn child for purposes of determining the number of persons in the
household.
B. Defining Household Income
The Applicant cannot have, at the time of application or at closing, a Household Income greater
than the applicable Household Income Limit. Generally, Household Income includes all income of all
occupants of the property, and all heads-of-household or spouses who do not live in the property, except as
noted in “Exclusions From Household Income” below.
Household Income is the total annual gross income, earned and unearned, from all sources, before
taxes or other deductions, received by the Applicant, all other persons 18 years of age and older who will
live in the property and not a full time student (12 hours per semester), separated or absent spouses, and all
unearned income of all members of a household, including minors.
THDA Originating Agents Guide Page 12 January 2014
Determining Household Income, as described in this Section 3.3, is essential for determining
eligibility for THDA loan programs. This determination of Household Income is an initial step that is
separate and different from subsequent credit underwriting for compliance with FHA, VA, USDA/RD or
PMI regulations.
C. Household Income Inclusions
Calculate Household Income for all members of the household and include all full-time, part-time
or temporary:
1. Wages, whether salary or hourly;
2. Overtime earnings, fees, tips and other compensation for personal services;
3. Bonuses, commissions, vacation pay, shift differential and holiday pay;
4. Social Security payments;
5. Interest, dividends and other net income of any kind from real or personal property; (any
withdrawal of cash or assets from an investment will be included as income, except to the
extent the withdrawal is reimbursement of cash or assets invested by a household member);
also, the greater of actual earnings or imputed earnings from liquid assets in excess of
$5,000.00.
6. Periodic determinable allowances such as alimony, child support and other recurring
payments or gifts from persons who will not reside in the property;
7. Periodic payments from annuities, insurance policies, pensions, retirement funds, royalties,
sick pay, trust income, disability, death benefits or other type of periodic payments,
including lump sum payments for the delayed start of a periodic payment, except Social
Security and Supplemental Security Income (SSI);
8. Armed Forces pay, including regular pay, special pay and allowances (excluding special
pay for exposure to hostile fire). Armed forces pay for a head-of-household or spouse is
always included, whether they are living in the household or not;
9. Payments in lieu of earnings, such as unemployment and disability compensation, worker's
compensation and severance pay (except lump sum payments as noted in “Exclusions From
Household Income”);
10. Welfare assistance;
11. Relocation payments made pursuant to Title II of the Uniform Relocation Assistance and
Real Property Acquisition Act of 1970;
12. Benefit and other non-earned income, including amounts paid directly to or on behalf of
minors and full-time students;
13. Any other source of income, except as noted in “Exclusions From Household Income”.
14. Annual net income from rental (net rental income is calculated at 75% of gross rent).
15. Total annual net income from operating a business or profession, including expenditures
for business expansion or capital indebtedness, and withdrawal of cash or assets except to
the extent the withdrawal is for reimbursement of cash or assets invested in the operation
by a household member; an allowance for deduction of straight line depreciation of assets
used in the operation is allowed.
THDA Originating Agents Guide Page 13 January 2014
D. Household Income Exclusions
When calculating Household Income do not include:
1. Earned income from employment of children and foster children under age 18; however,
benefits and other non-earned income paid directly to or on behalf of minors and full-time
students is counted as Household Income;
2. Payments received for care of foster children or foster adults;
3. Adoption assistance payments;
4. Amounts that are specifically for, or in reimbursement of, the cost of medical expenses for
a household member;
5. Income of a live-in aide;
6. Student financial assistance (educational grants, scholarships, educational entitlements,
work-study programs and financial aid packages) paid directly to the student or to the
educational institution;
7. Earned income of full-time students 18 years old or older who can be claimed as a
dependent by a household member; (earned income of a head-of-household or spouse who
is a full-time student must be included in Household Income);
8. Armed Forces special pay for exposure to hostile fire;
9. Earned Income Tax Credits;
10. Amounts received that are incident to a training program funded by HUD, including
compensation that is a component of a state or local employment training program with
clearly defined goals and objectives, the duration of which is for a limited period,
determined in advance;
11. Amounts received by a disabled person that are disregarded for a limited time for purposes
of Supplemental Security Income (SSI) eligibility and benefits because they are set aside
for use under a Plan to Attain Self-Sufficiency (PASS);
12. Amounts received by a participant in a publicly assisted program which are specifically for
or in reimbursement of out-of-pocket expenses (such as special equipment, special
clothing, transportation, child care, etc.) and which are made solely to allow participation
in a specific program, such as the Community Work Experience Program, or the
Employment Search Program; this exemption also includes volunteer fire-fighters;
13. Temporary, sporadic or nonrecurring income, including gifts;
14. The value of Food Stamps;
15. Lump sum additions to assets, such as inheritance, insurance payments (including health
and accident insurance and worker's compensation payments), capital gains, settlement for
personal or property loss, and deferred periodic payments received in a lump sum from
Supplemental Security Income (SSI) and Social Security benefits;
16. Repatriation payments made by foreign governments pursuant to claims filed under the
laws of that government by persons who were persecuted during the Nazi era (initial
determination or reexamination must have been made on or after April 13, 1993).
THDA Originating Agents Guide Page 14 January 2014
3.4 RESIDENCE REQUIREMENT
The Applicant(s) must occupy the property as their permanent, principal residence within 60 days
after the THDA loan is closed. The Applicant(s) must use the property as their permanent, principal
residence for the life of the THDA loan.
3.5 THREE YEAR REQUIREMENT
Applicant(s) who have had an ownership interest in their principal residence within the three years
(a full 36 calendar months) prior to the date of application are not eligible for a THDA loan. When an
applicant is married, both spouses must meet the three year, first-time homebuyer requirement. The three
year requirement does not apply if the property to be acquired with the THDA loan is located within a
Targeted Area (See Section 3.7) or under certain circumstances if the applicant is a veteran (See
Section 3.5.c).
A. Permitted Ownership Interests
An Applicant may have the following ownership interests in their principal residence within the
last three years and be eligible for a THDA loan:
1. An ordinary lease, with or without an option to buy;
2. The interest of a buyer under a standard residential purchase contract;
3. A mere expectancy to inherit property at a later date;
4. A remainder interest;
5. A manufactured home without ownership of the land on which it is located;
6. A manufactured home and land on which it was located, if the manufactured home was not
titled and assessed as real property;
7. Any of the prohibited ownership interests if the property is in a Targeted Area;
8. Any other interest that is not a prohibited interest, as determined by THDA.
An Applicant may also have the following ownership interests within the last three years and be
eligible for a THDA loan:
1. An ownership interest in a vacation home or rental property;
2. A financial interest in a residence in which the Applicant has not resided at any time within
the last three years;
B. Prohibited Ownership Interests
See Section 3.7 to determine whether the property is in a Targeted Area. If the property is in a
Targeted Area, this requirement does not apply.
Applicants who have had any of the following ownership interests in their principal residence
within the three years (a full 36 calendar months) before the date of the THDA loan application are not
eligible for a THDA loan to acquire property located within a non-Targeted Area:
1. A fee simple interest;
2. A joint tenancy;
3. A tenancy in common;
THDA Originating Agents Guide Page 15 January 2014
4. A tenancy by the entirety;
5. The interest of a tenant-shareholder in a cooperative;
6. A life estate;
7. A land contract;
8. Ownership of a manufactured home and the land on which it was located, if the
manufactured home was titled and assessed as real property;
9. An interest in an Applicant's principal residence created by the existence of an
inheritance, whether title is vested in the Applicant or not;
10. Any of the above interests held in a trust (whether or not created by the Applicant) that
would constitute an ownership interest if held directly by the Applicant.
11. Interest arising because, within the last three years, the Applicant's name was included on
a deed to a residence which the Applicant occupied as their principal residence.
12. Interest arising because, within the last three years, the Applicant was married to a person
who had one of the prohibited ownership interests in a residence which Applicant occupied
as their principal residence.
13. Any other interest that constitutes an ownership interest, as determined by THDA.
C. Veteran Exemption
Veterans and their spouses do not have to meet the three year requirement (i.e. be a first-time
homebuyer) under certain circumstances to be eligible for THDA’s mortgage programs. “Veterans” as
defined in 38 U.S.C. Section 101, so long as the Veteran did not previously receive a bond finance mortgage
under this exception and, generally, includes anyone (a) who has served in the military and has been
released under conditions other than dishonorable or (b) who has re-enlisted, but could have been
discharged or released under conditions other than dishonorable.
3.6 NEW MORTGAGE REQUIREMENT
A THDA loan cannot be used to refinance an existing loan. A THDA loan may replace a temporary
construction or bridge loan if acceptable documentation is provided to THDA that such a loan has a non-
renewable term of twenty-four (24) months or less, documented with a copy of the construction or bridge
loan note and recorded Deed of Trust. A THDA loan cannot close with a three-day Right of Rescission. All
THDA loans must be amortized for a term of 30 years, unless a different term is specifically stated in this
Guide
3.7 TARGETED AREAS
A Targeted Area is a qualified census tract or an area of chronic economic distress as designated
by the IRS. A Targeted Area may be an entire county or may be a particular census tract within a county.
The Targeted Area designation is important for two reasons:
1. The Three Year Requirement (see Section 3.5) does not apply in Targeted Areas; and
2. THDA is required to use or set aside a portion of the proceeds from each bond issue for
loans in Targeted Areas.
Documentation in each application file submitted to THDA must correctly identify whether the
property is or is not located within a Targeted Area. The Appraisal must identify the relevant census tract.
If a discrepancy occurs in the census tract information reported on the appraisal versus the census tract
shown on the Flood Hazard Determination, the Originating Agent must clarify and provide correct census
tract information to THDA.
THDA Originating Agents Guide Page 16 January 2014
A. Census Tracts
The US Census Bureau divides the United States into many small geographic areas, and identifies
each with a unique series of numerals separated by decimals. These numbers indicate the property's state,
county, tract, and sub-tract. An example of a complete Census Bureau identification number and an
explanation of its elements follows:
Example: 47.157.0078.10
“47” - the US Census Bureau identification number for Tennessee. THDA does not require this
number to be indicated on the appraisal report.
“157” - the US Census Bureau identification number for Shelby County. THDA does not require
the Census Bureau county code number to be entered on the appraisal report.
“0078” - the US Census Bureau identification number for one of the census tracts within Shelby
County. The correct census tract number must be indicated on the Appraisal for property located
in those counties.
“10” - the US Census Bureau sub-tract number within tract 0078.
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THDA Originating Agents Guide Page 17 Revised 08/01/2018
B. Current Targeted Areas
1. Counties
Campbell Franklin Houston Monroe Union
Cannon Gibson Jackson Morgan Van Buren
Carroll Grainger Jefferson Overton White
Claiborne Greene Johnson Pickett
Cocke Grundy Lake Polk
Crockett Hancock Lauderdale Rhea
Dekalb Hardeman Lawrence Scott
Dyer Hawkins Lincoln Stewart
Fayette Haywood Macon Tipton
Fentress Henderson Meigs Trousdale
2. Census Tracts
County Census Tracts Bradley 104.00 108.00
Coffee 9709.00
Davidson 113.00 118.00 119.00 126.00 136.01 136.02 138.00
139.00 142.00 143.00 144.00 148.00 163.00 190.03
190.05 193.00
Hamblen 1003.00
Hamilton 4.00 16.00 19.00 20.00 24.00 25.00 109.02
122.00
Henry 9693.00
Knox 8.00 14.00 24.00 26.00 28.00 29.00 67.00
68.00 69.00 70.00
Madison 4.00 5.00 7.00 8.00 9.00 10.00 11.00
Montgomery 1001.00 1004.00 1009.00
Robertson 804.01
Rutherford 419.00
Shelby 2.00 4.00 6.00 8.00 9.00 11.00 14.00
15.00 19.00 20.00 21.00 24.00 28.00 38.00
45.00 46.00 50.00 53.00 55.00 56.00 57.00
58.00 59.00 67.00 68.00 70.00 75.00 78.10
78.21 79.00 82.00 89.00 99.02 101.20 102.10
103.00 105.00 106.30 112.00 113.00 114.00 115.00
116.00 205.23 205.42 217.25 222.20 223.21
Sullivan 406.00
Washington 609.00 610.00
Weakley 9682.02
THDA Originating Agents Guide Page 18 Revised 08/07/2019
SECTION 4: OTHER THDA PROGRAM REQUIREMENTS
4.1 ELIGIBLE APPLICANTS
An Eligible Applicant must meet ALL of the following criteria:
1. Possess and demonstrate the legal capacity to incur the THDA debt (not be judged
incompetent, and be age 18 or older or have minority removed by judicial process);
2. Meet credit underwriting standards of the relevant insuring program as evidenced by the
approval of a Direct Endorsement underwriter or the insurer program accepted
underwriting software, i.e. Loan Prospector, Desktop Underwriter;
3. Be, or become, within 60 days after the THDA loan closing, a resident of the State of
Tennessee and intend to occupy the property as their principal residence;
4. Have gross assets of such amounts as to be considered a person of low or moderate income,
as THDA may determine from the documentation contained in the application file (See
Section 5.2); and
5. Agree to occupy the property as their principal residence and agree not to rent the property
during the term of the THDA loan, as sworn to in the Application Affidavit and as
precluded by the THDA Rider.
6. Must be a U.S. citizen or permanent resident alien.
4.2 PROPERTY ELIGIBILITY
A. Eligible Property
Eligible property must meet all of the following requirements:
1. Be one of the following:
(a) A detached or semi-detached house;
(b) A row-house, townhouse, condominium or be part of a planned unit development.
For a property located in a condominium development, including developments
less than 100% complete, the condominium development must have approval by
either FHA, VA, USDA/RD, FHLMC or FNMA;
(c) A one, two, three, or four-family residence, one unit of which must be occupied by
Applicant as his/her principal residence;
(d) Any of the above types of residences, existing, new or proposed:
(1) built on site, or
(2) a modular home permanently attached to a foundation (in compliance with
HUD guidelines, or
(3) a HUD approved double-wide manufactured home permanently attached to a foundation (in compliance with HUD Manual 4930.3, “Permanent Foundations Guide for Manufactured Housing”), with wheels, axles, towing tongue and running lights removed. If any portion of a
THDA Originating Agents Guide Page 19 January 2014
residence includes a manufactured home, the residence is classified as a
manufactured home for THDA’s purposes. A structural engineer’s report
is required stating that the home is permanently attached to a foundation
in compliance with HUD guidelines.
2. Any property consisting of more than one unit as described above, or that contains a
separate living unit detached from the Borrower’s principal residence, will not be eligible
for THDA funding.
3. Not to be used in a trade or business or as an investment property, vacation home or
seasonal home. Occasionally individuals claim a business deduction on their Federal
Income Tax Returns. In most cases this is a small portion of the home used as an office and
the tax return must show the percentage of square footage used for the business deduction.
As long as the square footage used for a business deduction is 15% or less, it is acceptable
to THDA. Obviously, the home cannot be used as a day care center, beauty salon or other
similar businesses.
4. Be in good condition, meet state and local codes, comply with local zoning in its present
use.
5. Be in complete compliance with any and all loan program insurer guidelines for minimum
property standards and loan insurance. Any closed loan subsequently found ineligible for
insurance for a property related issue, as determined by the relevant insurer, is ineligible
for THDA funding and immediately subject to repurchase by the Originating Agent,
without exception.
6. In order for a HUD owned property to be considered an eligible property for THDA
funding, it must be listed for sale as:
“Insurable”, meaning that FHA’s MPR has been met at the time of the
appraisal, and no repairs are required regardless of program type (FHA,
VA, USDA/RD, or Conventional):
or
“Insurable With Conditions” and all conditions have been satisfied to fully
meet FHA’s MPR or HUD is providing escrow funds to cover the costs of
required repairs regardless of program type (FHA, VA, USDA/RD, or
Conventional).
The HUD Appraisal must include the estimated cost of any required repairs and must state
that the utilities were on. THDA will allow HUD escrow for repairs to be included in the
loan amount. THDA will also allow borrower funded escrow for required repairs. The
appraiser must specify the cost of any and all required repairs. An actual bid from a licensed
contractor stating the total cost of the required repairs may be required by THDA. The
Originating Agent must be responsible to insure that adequate funds are available to
complete the required repairs and at a minimum, one and one-half (1½ ) times the cost of
the repairs must be held in escrow. The required repairs must be completed within 60 days
of the date of loan closing and a clear, final inspection by the appraiser or Originating
Agent is required. An escrow agreement signed by the Originating Agent and the borrower
must be provided to THDA. THDA reserves the right to reject any request for escrows.
THDA Originating Agents Guide Page 20 Revised 11/10/2014
B. Appraisals
The Originating Agent is responsible for selecting appraisers and reviewing the quality of their
work. THDA does not maintain a list of approved appraisers; however, THDA reserves the right to refuse
appraisals from specific appraisers or appraisal firms. THDA also reserves the right to require a new
appraisal prepared by a different appraiser or to require additional information, including additional
comparable sales.
In September 2005, FHA issued ML 2005-34 announcing the adoption of Fannie Mae’s revised
appraisal forms. Also in December, 2005, FHA issued ML 2005-48 pertaining to required repairs and
inspections for existing properties. THDA has approved and adopted these same guidelines and policy
changes as it relates to FHA loans.
As an element of THDA’s quality control process, appraisal desk reviews and field reviews may
be ordered by THDA. Reviews indicating that the original appraisal contained unrealistic valuation methods
or conclusions, or reviews that reveal patterns of inappropriate valuations, may result in the suspension of
the appraiser from THDA’s programs, or other appropriate action.
All application files submitted for THDA underwriting must include a Uniform Residential
Appraisal Report (URAR), completed by an appraiser who is licensed by the State of Tennessee, and who
has no financial interest in the transaction.
The Appraisal must indicate an appraised value acceptable to THDA. An application may be
rejected by THDA if:
1. The appraised value of the property exceeds the applicable Acquisition Cost Limit by more
than 20%; or
2. The Appraisal indicates a land value in excess of 35% of the total appraised value of the
property, unless otherwise approved by THDA in its sole discretion; or
3. The Appraisal indicates the property values for the neighborhood in which the property is
located are declining and the Applicant is seeking a THDA mortgage loan for maximum
financing.
C. Acceptable Amount of Land
Property purchased using a THDA loan program can include one subdivision lot of up to five acres
in size, as shown on a recorded subdivision plat, without express THDA approval. More than one recorded
subdivision lot may be acceptable at THDA’s discretion, if the lots are located in an older subdivision
containing narrow “shotgun” lots, and if one lot does not contain the minimum size required under local
regulation to permit construction of a residence. Lots of any size not shown on a recorded subdivision plat
require express approval by THDA, at THDA’s sole discretion.
Land relating to a residence shall be considered as part of the residence only if such land reasonably
maintains the basic livability of the residence and does not provide a source of income to the mortgagor.
THDA Originating Agents Guide Page 21 Revised 05/23/2016
4.3 ELIGIBLE LOAN TYPES AND TERMS
A. Types Of Loans
Each THDA loan must be one of the following:
1. Insured or guaranteed by one of the following:
a. the Department of Veterans Affairs (VA), as evidenced by a Loan Guaranty
Certificate (LGC); or
b. the Federal Housing Administration (FHA), as evidenced by a Mortgage Insurance
Certificate (MIC) in FHA connection; or
c. the United States Department of Agriculture, Rural Development, as evidenced by
USDA/RD Form 3555-17.
2. Conventional loans must have a loan-to-value ratio of 78% or less based on the loan amount
divided by the lesser of appraisal or contract sales price. In the case of a self-built new
construction, the ratio is based on the lesser of appraised value or actual total cost.
B. Maximum Loan-To-Value Ratios
As permitted by FHA, VA, USDA/RD, or 78% LTV for conventional loans, subject to any
restrictions contained in this Guide.
C. Maximum Loan Amount
1. Conventional Loans
a. All Conventional loans must be underwritten using FNMA and FHLMC
guidelines, no expanded approvals allowed. Automated Underwriting Systems,
FNMA’s (DU) or FHLMC’s (LP) must be used for the underwriting decision.
b. Loans at 78% or less LTV may be manually underwritten if the borrower/s have
no credit score. However, if FNMA or FHLMC’s Automated Underwriting System
(DU or LP) is used, no expanded approvals are acceptable for THDA loans.
2. FHA, VA or USDA/RD Loans
The Base Loan Amount cannot exceed the appraised value, and cannot exceed THDA’s
Acquisition Cost limit for the county in which the property is located. The Total Loan
Amount may exceed the maximum Acquisition Cost limit by no more than the amount of
financed MIP, funding fee or guaranty fee.
3. FHA 203(h) Mortgage Insurance for Disaster Victims
THDA will accept applications under FHA's Section 203(h) Mortgage Insurance for
disaster victims, provided they were a tenant who lost the use of their rental primary
residence due to a natural disaster located within a Presidentially declared area.
Program is in effect for one year from when the President declares the disaster.
100% financing for disaster victims whose homes/residences have been either
destroyed or damaged to the point that reconstruction is required in a Presidentially
declared disaster area.
THDA Originating Agents Guide Page 22 Revised 03/07/2016
The victim/borrower does not have to purchase in the declared disaster areas.
Find the listed Presidentially declared disaster areas at: www.fema.gov .
The victim/borrower has to provide proof of permanent residence in the disaster area
and proof of destruction of residence with the following recommended documents:
o Proof of permanent residence: valid driver's license, voter registration
card, or utility bills;
o Proof of destruction of residence: an insurance report, an inspection report
by an independent fee inspector or government agency (FEMA), or
conclusive photographic evidence showing the destruction or damage.
The following properties are eligible: one unit detached homes, approved condominium
projects, or spot loan condominiums. (Two, three, and four unit properties are not eligible
to be purchased in this program.)
Closing costs and prepaids can be paid by the buyer, seller, Originating Agent, or through
the THDA Great Choice Plus second mortgage loan program.
Standard FHA and THDA underwriting guidelines apply for qualification.
4. THDA will not accept applications from any applicant whose credit score is below 640.
Applicant(s) with no credit scores, however, may be manually underwritten using non-
traditional credit guidelines in accordance with FHA, VA or Rural Development
requirements. If all applicants do not have a credit score, application must be manually
underwritten using non-traditional credit guidelines.
5. The total debt to income ratio must not exceed 45%. Debt to income ratio for manual
underwriting must not exceed 43%. Debt to income ratio for non-traditional credit file
(no scores) is limited to 36%.
6. Other Considerations
a. A Gift of Equity may be considered by THDA on a case-by-case basis on an
existing home or new construction under certain circumstances. The terms of the
Gift of Equity must be stated in the sales contract and must be from an immediate
family member. Immediate family member is defined as parents, siblings and
grandparents. If the home is proposed or under construction, the maximum loan
cannot exceed the borrower’s actual cost of construction plus the borrower’s actual
cost of the lot, both of which must be verified. THDA reserves the right to ask for
or require additional documentation on any loan with a Gift of Equity.
b. For transactions involving estate sales wherein the Applicant is an heir, the
maximum loan amount must be calculated after deducting the Applicant/heir’s
anticipated share of the sale proceeds.
D. Security
All THDA loans must be secured by a first lien on the property. In addition, at the option of the
borrower, a Great Choice Plus loan for DPA/closing costs assistance may be provided. All Great Choice
Plus loans must be secured by a second lien on the property.
E. Loan Payment Terms
1. Great Choice
Great Choice loans must be fully amortized, with level payments, and must be for a term of 30
years. If a 30 year loan term exceeds the economic life of the property, as provided in the appraisal report,
THDA may not approve the loan.
THDA Originating Agents Guide Page 23 Revised 07/01/2020
2. Great Choice Plus
The Great Choice Plus loan has an interest rate the same as the first mortgage interest rate, monthly
payments amortized over 15 years, second lien. Great Choice Plus second mortgage loans can only be
used for closing costs, prepaids and down payment assistance. Amount of assistance is $6,000 for sales
price less than $150,000, and $7,500 for sales price equal to or more than $150,000.
F. Prepayment Penalty
Prepayment penalties are not permitted on THDA loans.
G. Late Charge
Late charges, if any, must be reflected in the Deed of Trust and Note and must be in compliance
with program insurer’s guidelines.
Great Choice Plus secondary mortgage loan must reflect in the Deed of Trust and Note a late charge
of 5% of the overdue payment of principal and interest if the monthly payment is not made by the end of
15 calendar days after the date it is due.
H. Origination Fee
May not be charged by the lender.
I. Assumptions
THDA first mortgage loans are assumable only if the person assuming the THDA loan meets all
THDA program requirements applicable to new THDA loans, and the assumption application is approved
by THDA. Assumption applications are processed by THDA or the THDA Servicer of the loan to be
assumed.
THDA second mortgage loans are not assumable with the exception of a VA assumption.
4.4 FEDERAL RECAPTURE
All THDA loans closed after December 31, 1990, are subject to the federal recapture tax. The
recapture tax is designed to recapture a portion of the subsidy associated with THDA loans. Recapture tax
liability must be determined at the time the property is sold, if the sale occurs within nine years from the
closing of the THDA loan. Refinancing a THDA loan does not trigger recapture tax liability, however, if
the property is sold after the date of refinancing but before the ninth anniversary of the THDA loan closing,
recapture tax liability must be determined at the time of sale. THDA Originating Agents notify the
Applicant about recapture tax at the time a THDA loan application is made by securing their signature on
the Notice To Applicants Federal Recapture Requirements.
Whether the recapture tax results in an actual payment to the federal government depends on a
number of factors, including changes in family income, gain on the sale of the property, the number of years
the THDA loan is outstanding, and the original THDA loan amount. The exact amount to be paid, if any,
cannot be determined until the property is sold.
A THDA loan, originally closed after December 31, 1990, that is assumed within nine years from
the date of the original THDA loan closing is subject to the recapture tax for an additional nine year period
beginning on the date of the assumption.
For further information regarding the federal recapture tax, advise Applicants or Borrowers to
contact their tax professional. Written information is available by ordering IRS Form 8828 “Recapture of
Federal Mortgage Subsidy” and its accompanying instructions from any IRS office or through the IRS
website at www.irs.gov.
THDA Originating Agents Guide Page 24 Revised 07/22/2020
SECTION 5: PROCESSING AND CREDIT UNDERWRITING REQUIREMENTS
5.1 OVERVIEW
A. Rates and Rate Lock
Current interest rates are listed on our website at www.thda.org. Rates can be locked at any time
prior to submission. Loans must be locked at the time the complete loan file is submitted to THDA for
approval. For mortgage loan programs described in section 1.4, existing construction rates will be locked
for 90 days; new/proposed construction will be locked for 180 days. One 30 day extension may be allowed.
Rate lock desk is available 9 a.m to 5:30 pm CST during THDA’s business days. Rate locks cannot be
cancelled and relocked when interest rates decrease. If a loan is cancelled and the borrower changes
properties, a new lock can be obtained. If Program changes, THDA will take original lock date and new
lock request into consideration and provide lock confirmation reflecting highest day pricing. THDA
reserves the right to request a Change of Circumstance from the Originating Agent.
B. Disclosures
1. Great Choice
Originating agents are required to provide all disclosures that comply with all federal and state
laws and/or regulations. These include, without limitation, signed and dated copies of loan
estimate, Tennessee Residential Property Condition Disclosure and transfer of servicing
disclosures.
2. Great Choice Plus
Originating agents will provide all disclosures that comply with all federal and state laws and/or
regulations. These include Loan Estimate and Closing Disclosure.
C. Underwriting Guidelines, Debt Ratios, Credit Scores, Compensating Factors
Eligible applicants must meet credit underwriting standards of the relevant insuring program, as
evidenced by the approval of a Direct Endorsement underwriter and the insurer, program accepted,
underwriting software, i.e. Loan Product Advisor (LPA), Desktop Underwriter (DU). LP or DU acceptance
must also be signed by the Originating Agent underwriter or processor verifying the accuracy of information
or data required to receive approval.
All loan submissions with a borrower(s) credit score (middle score or lowest score if only two
scores) below 640 will not be eligible for THDA funding. THDA will accept loans with the following
decision responses which shall meet the following THDA requirements:
1. Approve/Eligible: Maximum debt ratio of 45% and a minimum credit score of 640.
2. Refer/Eligible - due to “no score” only: Loans must be manually underwritten using non-
traditional credit guidelines in accordance with FHA guidelines, maximum debt ratio of 36%.
Two months PITI in reserves. This cannot be a gift.
3. Refer/Eligible: Loans must be manually underwritten, maximum debt ratio of 43%, minimum
credit score of 640, and must meet two of the three THDA overlays listed below.
The borrower must have a verified rental history. Verification of rental (VOR) is
acceptable if borrower is renting from a commercial management company; or 12 months
canceled checks/bank verification if borrower is renting from a private landlord.
One month PITI in reserves. This cannot be a gift.
A two year job history with a minimum of 12 months at current employer.
4. Approve/Ineligible: As it refers to the HUD REO $100.00 down payment program only,
maximum debt ratio of 45% and minimum credit score of 640.
All THDA loan application packages will be required to include a copy of the completed FHA
Loan Underwriting and Transmittal Summary or Loan Analysis signed by an authorized program endorsed
underwriter of the Originating Agent, or correspondent underwriting agent. (See Section 6.2. K)
THDA Originating Agents Guide Page 25 Revised 07/22/2020
Any closed loan subsequently determined to be ineligible for program insurance due to non-
compliance with that program’s credit underwriting guidelines will be ineligible for THDA funding and
subject to repurchase without exception.
D. Homebuyer Education
Borrowers are required to obtain pre-purchase homebuyer education and counseling provided by a
THDA approved Homebuyer Education (HBEI) Provider at one of the approved agencies listed on
THDA’s website at www.thda.org. Each person on loan is required to obtain homebuyer education. The
following formats are available for Homebuyer Education:
1. Face-to-Face
A minimum of six hours of classroom education
A four hour class or workshop, paired with a minimum of one hour of individual
counseling
A minimum of four hours of face-to-face, one-on-one homebuyer counseling
2. Online Education
A minimum of one hour of individual counseling paired with THDA's approved
eHomeAmerica online homeownership education course
o The borrower may access the course via THDA's website or by
contacting the approved Provider agency directly.
o The borrower will select an HBEI Provider and pay a fee during the
online registration process.
o Upon completion of the course, the borrower will be contacted by the
HBEI Provider and required to participate in a one hour counseling
session. The session provides follow-up counseling on the test questions
and additional counseling regarding the customer's budget and
responsibilities as a homeowner.
After the Homebuyer Education course is completed, the HBEI Provider will provide the
borrower with their THDA Certificate of Completion. The certificate will be in effect for 12 months after
which course must be retaken.
E. Age of Credit Documents
All credit documents must be current when submitted to THDA for underwriting. Loan must close
by the earliest date, date listed on AUS findings or rate expiration date For new/proposed construction
loans, income documents more than 120 days old must be updated and resubmitted for THDA review and
approval when construction is complete.
All updates and requests for extension of the Commitment must be submitted with updated
documents for THDA approval prior to the Commitment expiration date.
F. Qualifying Spouse
When an application is made by two people, both are considered co-applicants for THDA eligibility
purposes. Both must sign the Application Affidavit and the income of both persons must be included in
calculating Household Income as described in Section 3.3. Both persons must execute the Note and the
Deed of Trust.
G. Non-Qualifying Spouse
1. Cannot have owned principal residence in the past three years unless present property being
purchased is in a targeted area.
2. Items required as documentation on the non-qualifying spouse:
a. Income verified and a current pay stub.
b. Signature on an original Application Affidavit (can be on the same Affidavit as
borrower or on a separate Affidavit).
c. Copy of the most recent tax year Federal Income Tax Return and W-2’s.
THDA Originating Agents Guide Page 26 Revised 07/22/2020
d. Signature on the Deed of Trust at closing (signing away marital interest).
e. Must be US Citizen or permanent resident alien
H. Co-Signers
THDA will not approve any loan that includes the use of a co-signer.
5.2 ASSETS
A. Substantial Liquid Assets
If an Applicant has non-recurring deposits in excess of $300 the Applicant must explain the source
and circumstances of such deposits. THDA will make a case-by-case determination of the acceptable level
of liquid assets and/or recurring income based on the information and documentation provided in the
application file.
B. Sale of Assets
Funds to close the THDA loan that are obtained from the sale of an asset must be documented.
Include a copy of the bill of sale.
If the source of funds to close are from the sale of commercial property, manufactured home
(chattel) or non-owner occupant residential real estate, documentation must be provided to establish
whether income is being received, or will be received, or to show that the property was sold and not retained
for rental income. If there is financing income or rental income, it must be included in Household Income
(See Section 3.3).
C. Gift Letter
A gift letter must be properly documented and verified in accordance with program insurer
guidelines.
5.3 VERIFICATIONS
A. Employment Verifications
Full documentation is required for THDA. All current full-time and part-time employment or self-
employment covering a period of at least the last two years must be verified in writing. Telephone
verification is acceptable on previous employment. For current employment not verified with a standard
VOE form, answers to all questions contained on the standard VOE must be provided by the employer on
employer letterhead. Verifications must indicate bonuses, next pay increase, overtime and scheduled
number of work hours if paid by the hour. In addition, a copy of each Applicant’s most recent pay stub is
required (no more than 30 days old). This income verification and documentation is also required for a
non-qualifying spouse and any other occupant of the property 18 years of age or older.
For additional information see Section 6.2, O.
B. Sole-Proprietorship Verifications
Year-to-date P&L, Plus 1040’s with Schedule C for a minimum of two tax years, and 24 months
in business.
C. Partnership Verifications
Year-to-date P&L, Plus 1065’s with Schedule K-1 and Schedule E, part II; Partnership returns with
all schedules. Minimum two tax returns and 24 months in business.
THDA Originating Agents Guide Page 27 Revised 08/07/2019
D. Limited Partnership Verifications
1065, Schedule K-1 and Schedule E, part II; Partnership Return with schedules. Minimum two tax
returns and 24 months in business.
E. Subchapter S Corporation Verifications
1120/1120S, Schedule K-1, Schedule E, part II, W-2 for Applicant. Minimum two tax returns and
24 months in business.
F. Corporation Verifications
Provide if Applicant owns or controls 25% or more of the stock. Corporation Return, Form 1120
and Schedule L (if applicable); W-2 for Applicant. Minimum two tax returns and 24 months in business.
G. Deposit Verifications
Verification of Deposit (VOD) and Borrower’s most recent statement for each account or
alternative documentation, Borrower's bank statements for the previous two months for each account. When
non-traditional credit is used (no credit score), two months PITI in reserves is required. When manually
underwritten with a score of 640 or higher, one month PITI in reserves is required.
H. Veteran Status
Veterans applying for the exemption to the three year requirement must provide a copy of VA Form
DD-214 or VA Form DD-4 (Enlistment/Re-enlistment Document).
I. FHA 203(h) Proof of Permanent Residence
The victim/borrower's previous permanent rental residence must have been in the disaster area and
must have been destroyed or damaged to such an extent that reconstruction or replacement is necessary.
The victim/borrower must provide conclusive proof of permanent residence with one of the following:
Valid driver's license
Voter registration card
Utility bills
J. FHA 203(h) Proof of Destruction of Residence
The victim/borrower's previous permanent rental residence must have been in the disaster area and
must have been destroyed or damaged to such an extent that reconstruction or replacement is necessary.
The victim/borrower must provide proof of destruction with one of the following:
An insurance report
An inspection report by an independent fee inspector or government agency (FEMA)
Conclusive photographic evidence showing the destruction or damage
THDA Originating Agents Guide Page 28 Revised 11/12/2019
5.4 DEBTS, OBLIGATIONS AND OTHER EXPENSES
A. Remaining Debt Payments
Although most program insurer underwriting guidelines allow a certain number of remaining
scheduled debt payments to be disregarded for purposes of loan qualifying, the impact of existing debt
payments on Applicant’s budget at the time of the first scheduled THDA loan payment may be evaluated
in THDA’s sole discretion.
B. Bankruptcy (Chapter 7 and Chapter 13)
An Applicant’s Chapter 7 bankruptcy must be discharged for a minimum of two years and
acceptable credit must be re-established to be eligible for a THDA loan.
An Applicant’s Chapter 13 bankruptcy must be discharged for a minimum of one year, with all
payments on the plan made as agreed, and acceptable credit re-established or maintained during this time.
Applicants currently in bankruptcy are not eligible for THDA loan programs.
THDA considers re-established credit, tradelines either traditional or non-traditional that have been
active for 12 consecutive months.
C. Previous Default
Applicants with prior foreclosures or deeds-in-lieu are not eligible for THDA loan programs for a
period of three years from the date of the foreclosure sale. If the foreclosure or a short sale was on a THDA
funded loan, the borrowers are not eligible for another THDA loan.
D. Child Support and Alimony Obligations
Include a copy of the final order, signed by the court. Payments must be current.
E. Judgments
Any and all judgments must be handled in accordance with the program insurer guidelines.
F. Federal or State Tax Liens, Tax Arrearages
All tax liens or arrearages must be paid in full. Include an acceptable explanation from the
Applicant.
G. Collections
Any and all collection accounts must be handled in accordance with program insurer guidelines.
H. Co-Signed Debt
Any and all co-signed accounts must be included in Originating Agent underwriting decisions in
accordance with program insurer guidelines.
I. Child Care Expense
Child care expenses must be handled in accordance with program insurer guidelines.
J. Legally Enforceable Obligation Letter
If a borrower receives a Great Choice Plus loan and has an FHA first mortgage, a Legally
Enforceable Obligation Letter, Form HO-0476, must be signed by Borrower at closing. This letter will
be sent to the Originating Agent with the THDA loan commitment.
K. Establishing / Re-establishing Credit
Borrower(s) must show credit worthiness to obtain financing with THDA. If establishing or re-
establishing credit, 3 non-traditional trade lines with 12 month good payment history must be provided, the
combination of traditional and non-traditional trade lines can be provided. Additional information may be
required at the discretion of THDA.
THDA Originating Agents Guide Page 29 Revised 07/20/2017
SECTION 6: SUBMITTING AN APPLICATION FILE TO THDA
6.1 OVERVIEW
Originating Agents must present accurate and complete information with each application file.
Information withheld or misrepresented may void a Commitment or if discovered subsequent to loan
closing, could result in a requirement for repurchase of the loan. Should the Originating Agent become
aware prior to closing that either the household composition first proposed, and/or the household income
first proposed has changed or will change prior to closing, THDA must be notified immediately and updated
loan documentation must be submitted.
The application file as submitted to THDA, must have all documentation being submitted in the
order shown on the THDA Underwriting Submission Checklist.
6.2 REQUIRED DOCUMENTS
A. Underwriting Submission Checklist
Include this form with each application file submitted to THDA for underwriting. See Section 9. If
the borrower(s) is applying for the Great Choice Plus loan in conjunction with their application for a Great
Choice loan, both blocks under Program Type must be checked.
B. Buyer Profile
A completed Buyer Profile must be included in the application file when submitted for THDA
underwriting. See Section 9 for instructions.
C. Application Affidavit
The original executed and notarized Application Affidavit must be uploaded as part of the loan
submission package. The Application Affidavit must be signed by each loan applicant. Married applicants
must both sign the Application Affidavit and meet first-time homebuyer eligibility requirements, even if a
non-qualifying applicant or spouse is involved.
D. Veteran Exemption Application Affidavit
The original executed and notarized Veteran Exemption Application Affidavit must be received as
part of the loan submission package if the veteran is applying under the exception to the three year
requirement. Married veteran applicants must both sign the Veteran Exemption Application Affidavit and
the veteran’s spouse does not have to meet the three year requirement.
E. Seller Affidavit
The seller of the property must execute a Seller Affidavit for each application file submitted to
THDA. The original Seller Affidavit must be retained by the lender. See Section 9 for additional
information.
THDA Originating Agents Guide Page 30 Revised 07/01/2020
F. Tax Returns
Copies of signed and dated Federal Income Tax Returns, including W-2’s, for the most recent tax
year for the Applicant(s) and/or any non-qualifying spouse must be included in the initial application file.
A Federal Income Tax Return also must be included in the initial application file for any household member
18 years or older who is required to file a Federal Income Tax Return.
If an Applicant or other household member 18 years of age or older cannot provide a copy of their
most recent Federal Income Tax Return, they must obtain an IRS Tax Transcript or IRS Letter 1722, which
are available from the IRS office where the tax return was filed. The Tax Transcript must be signed and
dated by the tax payer. Transcripts may be ordered by using IRS Form 4506. If an Applicant or household
member was not required to file a Federal Income Tax Return, provide a signed and dated statement
specifying why they were not required to file.
THDA, at its sole discretion, may require the most recent three years Federal Income Tax Returns
if there is any indication in the loan file of prior homeownership.
G. Notice To Applicants Federal Recapture Requirements
This THDA disclosure is required for all loan types and must be signed at the time of application.
Include the signed original in the application file. Furnish the Applicant a copy of the signed original.
H. Grants/Downpayment Assistance Approval Letters
If the Applicant expects to receive a grant or downpayment assistance from an entity other than
THDA to facilitate the purchase of the property, include an approval/award letter from the granting
organization indicating the type of assistance and the approved amount in the application file. The granting
entity must be approved by the insured or guarantors and meet all the guidelines.
I. Transmittal Summary (Conventional and USDA/RD)
Include a Transmittal Summary with each conventional and USDA/RD application. This form is
considered as the Originating Agent’s underwriting approval and must be signed and dated by the
underwriter.
J. Insurance/Guaranty Approval
Based on the applicable loan type, include a copy of one of the following, accompanied by a copy
of its condition sheet (if approved with conditions):
1. FHA Transmittal signed and dated by a DE Underwriter if manually underwritten. If using
LP or DU automated underwriting systems and states an Accept/Approve, then an
underwriter’s signature is not required. CHUMS number must be ZFHA; or
2. VA (or VA Automatic) approval signed and dated by VA or the Originating Agent’s
Automatic underwriter; or
3. Executed USDA/RD 1980-18.
THDA Originating Agents Guide Page 31 Revised 07/22/2020
K. Loan Application (1003)
Include the initial 1003, signed and dated by the Applicant(s) and the loan officer and final 1003.
Three years of residency must be stated on the 1003.
L. Positive Identification
For all loan types, positive identification of each Applicant must be obtained in accordance with
insurer or guarantor guidelines. It is the Originating Agents responsibility to insure that those guidelines
are met.
M. Credit Report
The original credit report must be included in the application file unless it is required to be
submitted to the insurer or guarantor. The Applicant’s credit report must comply with the program insurer’s
minimum acceptable credit verification guidelines. Merged credit reports that comply with program
guidelines are acceptable.
N. Final Divorce Decree/Marital Dissolution; Court Ordered Child
Support; SSI or Other Assistance
Include copies of any or all of these documents, as applicable. Parenting plan may be used to
determine the accuracy of household composition.
O. Verification of Employment; Most Recent Pay Stub; Form Evidencing
Telephone Verification of Prior Employment; Self-Employment
OA must document the Borrower’s income and employment history for the most recent 2 years.
Verification of the accuracy of the income used for qualification purposes must be represented in the
submission. If primary employment is salary or hourly, the base pay rate for qualification purposes cannot
exceed the amount reflected on the most recent pay stub.
For additional information see Sections 5.3 and 5.4.
P. Documentation for Veteran Exemption
VA Form DD-214 if applicant is a discharged or released veteran. VA Form DD-4 if applicant has
re-enlisted, but was eligible for a discharge or release at the time of re-enlistment.
Q. Original Certificate of Title or Original Manufactured Certificate of Origin (Manufactured
Home)
The original Certificate of Title with any lien noted thereon having been marked released, or
original Manufactured Certificate of Origin (“MCO”) in the name of the seller of the subject property or
having been endorsed to the seller MUST be included in the Underwriting Submission package. The file
may be submitted electronically, however, a commitment will not be issued until THDA receives the
original Certificate of Title or original “MCO”.
The only exception to this requirement is, if the seller of the subject property has a mortgage on the
property and the lien holder is in possession of the title or MCO and will not release it until their loan is
paid off. Under this scenario, a copy of the Certificate of Title or MCO must be included in the Underwriting
Submission package and the commitment will be conditioned to receive the original Certificate of Title or
MCO with the Closed Loan package. However, THDA will not purchase the loan until we receive the
original Certificate of Title or original MCO.
R. Verification of Deposit or Bank Statements for Previous Two Months
See Section 5.3.
THDA Originating Agents Guide Page 32 Revised 08/28/2019
S. Sales Contract
Include a copy of the purchase agreement (fully executed by seller and Applicant) in the application
file. Any changes to the purchase agreement must be initialed by seller and Applicant.
T. FHA Conditional Commitment
Enclose the HUD Form 92800.5B (FHA Conditional Commitment) and the Appraisal Analysis
Sheet, both signed by the DE Underwriter.
U. Appraisal
Enclose an original Uniform Residential Appraisal Report (FMNA 1004) in the application file.
The Uniform Residential Appraisal Report must reflect inspections of both the interior and exterior of the
dwelling. If the original Appraisal must be submitted to the loan insurer or guarantor, a legible copy must
be enclosed.
If the negotiated sales price for the property was modified after the Appraisal was provided, enclose
a letter from the appraiser that indicates any changes in the appraiser’s conclusions.
V. Flood Notification
If the property lies within a Special Flood Hazard Zone, the Originating Agent must make proper
and timely disclosure to the Applicant in compliance with federal regulations. Provide a life of loan Flood
Hazard certification with the initial underwriting submission package or closed loan documents.
W. Loan Estimate
The initial Loan Estimate (LE) must be included in the Underwriting Submission Package and any
subsequent changes in the LE, if necessary, must be included in the Closed Loan Submission Package. The
LE must be provided for all second mortgage loans. Recording fees are the only allowable fees for second
mortgage loans.
X. Title Commitment
Title commitment must be provided to determine if borrowers have any tax liens. Title searches must
include public record information.
Y. Hazard Insurance
Hazard Insurance Declarations Page must be provided. See Section 7.4, item D. Hazard Insurance.
6.3 DOCUMENTING NEW CONSTRUCTION FOR CUSTOM BUILT HOMES
NOTE: This section does not apply to the purchase of a new or proposed residence located on a
lot that is not owned by the Applicant prior to the date of the loan closing.
A. Documentation Required
1. Copy of Warranty Deed to lot.
2. Copy of construction contract.
3. Contractor’s detailed cost estimate, if applicable.
4. Contractor’s final itemized bill, if applicable.
5. Final inspection with photos, when complete.
B. Manufactured Housing
For manufactured housing, additional or substituted documentation must include a contract for the
manufactured home and documentation for the cost of foundation, utilities, landscaping, driveways and all
other necessary improvements.
THDA Originating Agents Guide Page 33 Revised 11/12/2019
C. Borrower Obtains Construction Loan
1. Verification of the construction loan amount and term is required and should be added to
the 1003. No cash out to borrower at closing is allowed.
2. If the applicants have hired a contractor to build the home, a copy of the construction
contract is required and, at a minimum, the construction contract must state total cost or
price. It cannot state cost plus a percent for profit.
6.4 THDA UNDERWRITING DECISIONS
A. THDA Underwriting Results
THDA Underwriters review each application file (original, update or re-submission). This review
results in one of the following:
1. THDA Underwriters may approve an application file without conditions or subject to
conditions as specified in Section 6.5.
2. THDA Underwriters may request additional documentation from the Originating Agent.
3. THDA Underwriters may reject an application that fails to meet the requirements of this
Guide.
4. THDA Underwriters will reject an application if Household Income exceeds current
Household Income Limits, if Acquisition Cost exceeds current Acquisition Cost Limit, if
the property is not eligible for THDA financing, or if the Applicant’s credit is not
acceptable to THDA. THDA, at its sole discretion, reserves the right to credit underwrite
any loan and issue a denial based on unacceptable credit issues.
B. Rejections
Any application file rejected by a THDA Underwriter is reviewed by management before the
Originating Agent is notified.
C. Re-Submissions
Re-submitted application files are processed by THDA in the same manner as new application files.
THDA reserves the right to question a re-submitted application file that reveals significant income, deposit
or asset discrepancies when compared to the application file that was initially submitted.
6.5 COMMITMENTS
A. Application Approval
An application file is not approved until a written Commitment is issued by THDA. B. Commitment Term
Commitment term is determined when a mortgage loan file has a rate locked. Commitments for
existing homes are issued for a period of up to 90 days. Commitments for new/proposed construction homes
are issued for a period of up to 180 days. Loans must be closed by the rate lock expiration date. Commitment
is void when rate lock expires.
THDA Originating Agents Guide Page 34 Revised 11/12/2019
C. Commitment Conditions
Commitments may be conditioned by THDA as follows:
1. Commitments may be issued with Prior-To-Closing conditions that must be satisfied
before the loan can be closed, or
2. Commitments may be issued with conditions indicated under the heading “Receipt, With
Closing Documents” (closing conditions).
D. Satisfying THDA Commitment Conditions
1. All Prior-To-Closing conditions must be satisfied in a manner satisfactory to THDA prior
to loan closing. Submit all documents needed to clear all Prior-To-Closing conditions for
each application file simultaneously.
2. All Closing Conditions (indicated on the Commitment as “Receipt, With Closing
Documents”) must be satisfied by the time the loan is closed. Documentation acceptable
to THDA to satisfy Closing Conditions must be included with the closed loan file when
uploaded to THDA.
3. THDA, in its sole discretion, may refuse to purchase any loan when any loan closing
condition is not satisfied.
E. Update of Application or Commitment
The application file and the Commitment must be updated in the following situations:
1. After the Commitment is issued, if the Originating Agent becomes aware of significant
changes in the Applicant’s household composition, income or credit, updated
documentation must be submitted to THDA for review and approval.
2. When construction is complete (based on new/proposed construction) final inspection,
final photos and updated income documents (if more than 120 days old) must always be
submitted for THDA review and approval.
3. All requests for an extension of a Commitment must be accompanied with updated income
documents if the income documents are more than 120 days old (new/proposed
construction).
F. Loan Amount or Program Type Changes
Occasionally, there will be a change in the loan amount, and/or the loan program may change. If
the final loan amount is less than the loan amount indicated in the commitment, the Originating Agent
should immediately contact THDA.. THDA will issue a revised Commitment, but closing can proceed,
providing all other elements of the commitment have been satisfied.
If the final loan amount is more than the amount indicated in the Commitment, the Originating
Agent should immediately contact THDA Underwriting. Closing should not be scheduled or held if already
THDA Originating Agents Guide Page 35 Revised 07/01/2020
scheduled. The Originating Agent must submit revised loan amount documentation and the updated
Originating Agent underwriter approval on the higher loan amount.
In any and all cases where the loan amount changes after receiving the THDA approval, THDA
must be contacted before loan closing occurs. Do not close THDA loans when discrepancies exist.
G. Commitment Delivery
THDA will deliver Commitments to Originating Agents by email based on documentation
provided on the Underwriting Submission Checklist and OA Working Agreement.
H. Void Commitments
A Commitment is void under the following circumstances:
1. Prior-to-Closing conditions are not satisfied, as determined by THDA, before the loan is
closed;
2. Documentation in connection with “Receipt, With Closing Documents” (Closing
Conditions) is not submitted with the closed loan package, or is not satisfactory to THDA;
3. A grantee on the Warranty Deed is not named in the Commitment;
4. The property described in the closing documents differs from the property indicated in the
Commitment and/or on original URAR;
5. The loan closes as a loan type that is different from the loan type indicated on the
Commitment;
6. The loan closes in an amount larger than the amount indicated on the Commitment;
7. The interest rate or loan term differs from the Commitment;
8. The monthly principal and interest payment in the promissory note of the first or second
mortgage loan is less than the principal and interest payment indicated on the Commitment;
9. The monthly principal and interest payment in the promissory note of the first or second
mortgage loan exceeds the principal and interest payment indicated on the Commitment by
more than $.01;
10. The loan closes prior to the date of Commitment;
11. The loan closes after the Commitment expiration date (rate lock date) without Commitment
extension by THDA;
12. The closed loan servicing package is delivered to a servicer other than THDA;
13. The closed loan does not otherwise conform to the requirements contained in this Guide.
A loan closed with a void Commitment is not eligible for THDA funding. THDA will not purchase
a loan if the loan was closed with a void Commitment.
THDA Originating Agents Guide Page 36 Revised 07/01/2020
6.6 FUNDING THDA LOANS
Funding Method
All THDA first mortgage loans and THDA Great Choice Plus second mortgage loans are funded by the
Purchase Method. Under this funding method, the loan closes with the Originating Agent’s funds after all
Prior-to-Closing conditions have been cleared by THDA. After the closed loan file is delivered to THDA
with acceptable documentation and original mortgage notes are received, THDA may purchase the loan.
6.7 ADDITIONAL INFORMATION
A. Scheduling Loan Closings
Depending on volume, THDA attempts to review application files in the order of date received
within 5 business days following the date of receipt. Application files received later than those already on
hand will not be underwritten out-of-turn due to a scheduled closing date or the personal circumstances of
an Applicant or a seller. Applications hand delivered by the Originating Agent after 3:00 P.M. will be
considered received the following day for processing purposes. Applications received during the final
5 business days of the month should not be expected to close by end of month.
B. Change Of Property
If, at any time between application and closing, the Applicant wishes to purchase a different
property, a new transaction is created. If property is substituted before the application file is submitted to
THDA, be sure all references to the original property are omitted (including information on the 1003), and
a correct sales contract, appraisal and all original THDA Affidavits showing correct property address are
enclosed.
If the Applicant wishes to purchase a property different from that which is indicated in the
Commitment, the Commitment is void and a new application reflecting the correct property must be
submitted to THDA.
C. Change in Employment
If, at any time between commitment issued and closing, the Applicant is no longer employed at the
employment listed on the 1003, as determined by the Verbal Verification of employment (VVOE), THDA
must be notified immediately. The commitment is voided.
If the Applicant wishes to continue with the purchase of the property, a correct 1003, income
documentation and new approval documents must be provided and a new commitment will be issued.
THDA Originating Agents Guide Page 37 Revised 05/23/2016
SECTION 7: CLOSING A THDA LOAN
7.1 OVERVIEW
All THDA approved loans must be closed in compliance with the Commitment and in compliance
with the instructions contained in this Guide by a Settlement Agent who is an independent, third-party
attorney or a title company. A federal or state regulated financial institution may act as their own Settlement
Agent only with THDA’s prior written approval, and in THDA’s sole discretion. THDA will, however, rely
on the Originating Agent to remedy problems concerning closed loan documentation.
Any closed loan subsequently determined to be ineligible due to the terms of the closing, closing
documentation, failure to comply with insurer, guarantor or THDA closing conditions, early payment
default, and/or any other closing related problem or error, is ineligible for THDA funding, without
exception and the Originating Agent will be required to repurchase the loan, at THDA’s discretion.
A. Electronic Notes
A copy of the executed Note for the first and second mortgage (if applicable) should be emailed to
[email protected] or uploaded to the mortgage loan portal within 72 hours of loan closing.
B. Expedite Loan Documents
The Originating Agent must immediately submit the closed loan file for loan guaranty/insurance
and ship servicing documents to the THDA Servicer as soon as possible.
Failure to comply with delivery deadlines will result in the Originating Agent being required to
repurchase the loan from THDA or THDA will refuse to purchase the loan. See Section 8.2 for THDA
delivery deadlines.
7.2 LOAN COMMITMENT
If the terms of the closed loan do not match the Commitment, or Commitment conditions are not
satisfied, the Commitment is void. THDA may refuse to fund, may refuse to purchase or may demand
repurchase by Originating Agent of closed first and second loans that do not conform to the Commitment.
If any element of the transaction does not match the Commitment or if Commitment conditions are not
satisfied, do not proceed with the closing. A revised Commitment must be issued prior to closing if any
element of the proposed transaction does not match the Commitment. Contact THDA with any questions
or to obtain a revised Commitment prior to closing.
7.3 REQUIRED LOAN DOCUMENTS
A. Loan Documents
The most recent versions of the following instruments for the applicable loan type must be used,
including any applicable riders. A non-qualifying spouse must sign the Deed of Trust:
1. FHA: Multistate FHA Note (Tennessee)
Multistate FHA Deed of Trust (Tennessee)
THDA Rider
THDA Originating Agents Guide Page 38 Revised 07/01/2020
2. VA: FNMA/FHLMC Multistate Note (Tennessee)
FNMA/FHLMC Multistate Deed of Trust (Tennessee)
VA Rider
THDA Rider
3. USDA/RD (FmHA):
FNMA/FHLMC Multistate Note (Tennessee)
FNMA/FHLMC Multistate Deed of Trust (Tennessee)
THDA Rider
USDA/RD loans must close with FNMA/FHLMC documents only.
4. Conventional:
FNMA/FHLMC Multistate Conventional Note (Tennessee)
FNMA/FHLMC Multistate Deed of Trust (Tennessee)
THDA Rider
5. THDA Great Choice Plus Second Deed of Trust FNMA/FHLMC Multistate Note (Tennessee) (For Second Mortgage)
6. Legally Enforceable Obligation Letter
B. Due Dates
The promissory note must specify a first payment due date as the first day of the second calendar
month following the date of closing. All subsequent payments are due the first day of each month. Interest
credits are not allowed on THDA loan closings.
C. Late Charges
Late charges are permitted only in compliance with the applicable program insurer’s guidelines. If
the charge exceeds the allowable rate, the note will be returned for correction and signature by Borrower(s).
Great Choice Plus secondary mortgage loan must reflect in the Deed of Trust and Note a late charge
of 5% of the overdue payment of principal and interest if the monthly payment is not made by the end of
15 calendar days after the date it is due.
7.4 OTHER REQUIRED DOCUMENTATION
A. Title Insurance Policy
Use ALTA Loan Policy or ALTA Short Form Residential Loan Policy and include the following:
1. The insured amount must be equivalent to the amount of the first mortgage. THDA will
not require a Lender's Title Policy on the Great Choice Plus second mortgage.
2. THDA must be a “named insured”. Use the following language:
(Name of Originating Agent), and/or Tennessee Housing Development
Agency, and/or (Name of insuring or guaranteeing entity), as their interests
may appear.
OR
(Name of Originating Agent), its successors and assigns and/or (Name of
insuring or guaranteeing entity), as their interests may appear.
3. Taxes/assessments that are due and payable cannot be indicated as unpaid.
Endorsements to the Title Insurance Policy may be required as determined by THDA.
THDA Originating Agents Guide Page 39 Revised 07/15/2019
B. Warranty Deed
The Warranty Deed must convey the property to the borrower(s) indicated on the Commitment.
C. Termite Inspection/Treatment Certificate
Termite Inspections/Treatment Certificate provided as required by the insurer, guarantor or the
appraiser.
D. Hazard Insurance
Hazard insurance coverage must be issued in the name(s) of the titled property owner(s). The
insurance company issuing the hazard insurance policy must be licensed by the State of Tennessee, and
have a current financial rating by Best’s Insurance Reports of class IV or better.
The policy must insure against loss due to fire and other hazards covered by the standard extended
coverage endorsement on a replacement cost basis. The Borrower may elect to include additional coverages,
such as liability and earthquake insurance, and special policy riders.
The minimum acceptable amount of hazard insurance coverage is the appraised value less the site
value, as provided in the appraisal, or an amount sufficient to replace the structure as determined by THDA.
The maximum allowable amount for deductible will be the maximum of 1% of the loan amount, $2,500 or the maximum of guarantor’s guidelines for VA and USDA loans. The deductible clause may apply to either fire, extended coverage, or both.
Minimum initial term is one year.
THDA must be named as mortgagee in the original policy or in an endorsement. Use the following
language:
Tennessee Housing Development Agency
C/O (THDA Servicer), Loan # _ _ _ _ _ _ _ _
(Servicer’s mailing address)
(Servicer’s city, state, zip)
Coverage must be in force on or before the day of closing.
An original insurance policy or Certificate of Insurance is required. An insurance binder, a
memorandum of insurance or a premium bill is not acceptable. The Originating Agent must submit the
original policy or certificate to the THDA Servicer promptly after closing and a copy of the declarations
page to THDA with the closed loan package.
For loans in condominium developments, secure a Certificate of Insurance for the blanket hazard
insurance policy that covers the development or building.
Policies are not acceptable if, under the terms of the carrier’s charter, by-laws or policy,
contributions or assessments may be made against the Borrower, THDA or THDA’s designee; or if by the
terms of the carrier’s charter, by-laws or policy, loss payment is contingent upon action by the carrier’s
Board of Directors, policyholders or members; or the policy includes any limiting clauses (other than
insurance conditions) which could prevent THDA or Borrower from collecting insurance proceeds.
E. Flood Insurance
Flood insurance is mandatory for all loans with improvements located in Flood Zone A, without
exception. A copy of FEMA Form 81-93 Standard Flood Hazard Determination must be included with the
closed loan package when submitted to THDA. The Flood Certification MUST state it is for the life of loan.
If part of the property is located in Flood Zone A but all of the improvements are outside Flood Zone A,
flood insurance is not required, subject to the rules of the loan insurer or guarantor.
THDA Originating Agents Guide Page 40 Revised 07/01/2020
To waive the flood insurance requirement, a loan survey is required and must indicate the boundary
of Flood Zone A and show that all improvements included in the appraised value are outside of Flood Zone
A.
The amount of coverage must equal the total amount of the THDA approved loan up to the
maximum amount available through the National Flood Insurance Program.
The maximum allowable amount for deductible will be the maximum of 1% of the loan amount,
$2,500 or the maximum of guarantor’s guidelines for VA and USDA loans.
The same mortgagee clause and mailing address previously indicated under “Hazard Insurance”
must be used.
A copy of the flood insurance application and a copy of the check for the first year’s premium must
be enclosed with the closing package shipped to THDA.
F. Escrow for Repairs or Completion of Construction
Escrows for repair should be avoided. Submit the proposed escrow agreement to THDA prior to
closing. At a minimum, the escrow agreement must state what the escrow is for, the dollar amount to be
escrowed, and the completion date which may not exceed 60 days.
Loans should be closed with repair escrows only if the repairs are minor and can be completed
quickly. Escrows for completion of construction should only be for minor items, such as final landscaping
that is delayed due to seasonal weather.
The amount to be placed in escrow for the completion of repairs or construction must be the greater
of (a) 150 percent of the estimated cost of the repairs or the estimated cost to complete construction or (b)
the amount required by the applicable loan insurer or guarantor.
All work must be completed and a final inspection delivered to THDA by no later than 60 days
after closing.
An escrow agreement acceptable to THDA for repairs or completion of construction must be used.
The Originating Agent must hold and disburse the escrow funds in accordance with the Escrow Agreement.
G. Closing Disclosure
The Closing Disclosure (CD) is required. The net amount (amount after allowable closing costs)
of the second loan should be listed on the CD for the first loan.
H. Verbal Verification of Employment (VVOE)
The verbal verification of employment (VVOE) utilized by lenders to confirm the borrower’s
current employment status within 10 business days prior to the note date must e included in the closing
package.
7.5 OTHER REQUIREMENTS
A. Close In The Name Of
All THDA approved Great Choice loans must be closed in the name of the Originating Agent noted
on the Commitment and are assigned to THDA. THDA Great Choice Plus loans must also close in the
name of the Originating Agent noted on the Committed and are assigned to THDA.
THDA Originating Agents Guide Page 41 Revised 07/01/2020
B. Qualifying Spouse
Applications involving married applicants require that both spouses meet the first-time homebuyer
eligibility, except in Targeted Areas or if eligible for a veteran’s exemption.
A non-qualifying spouse must sign the Deed of Trust.
C. Rescission
THDA cannot fund or purchase a loan that is closed with a Three-day Right of Rescission.
D. Net Funds “To Borrower”
A borrower cannot receive any funds from the closing that exceed amounts that they paid in
advance from their personal funds for earnest money, appraisal fees, credit report fees, and homebuyer
education counseling. If a grant from an entity other than THDA is included in the transaction, coordinate
this subject with the grant provider. Borrowers using Great Choice Plus assistance cannot receive any funds
at closing from the assistance provided.
There are circumstances that arise at the closing table that cause excessive cash back to the
borrower. In these situations, THDA will allow a principal reduction to cure the issue.
E. Original Certificate of Title or Original Manufactured Certificate (MCO) of Origin
(Manufactured Home)
If the seller of the subject property has a mortgage on the property and the lien holder is in
possession of the original title or MCO and will not release it until their loan is paid off, the original
Certificate of Title with any lien noted thereon having been marked released, or Manufactured Certificate
of Origin (“MCO”), in the name of the seller of the subject property or having been endorsed to the seller
MUST be provided to THDA with the closing documents. If the Manufactured Home consists of more than
one (1) unit, you will need to provide the title or “MCO” for each unit. THDA will not purchase the loan
until we receive the original certificate of Title or original MCO.
F. Affidavit of Affixation (Manufactured Home)
An Affidavit of Affixation is required on all manufactured home loans and must be recorded as a
separate document. It cannot be recorded with or attached to the Deed of Trust. THDA’s Affidavit of
Affixation (Form HO-0453) is to be used unless the Settlement Agent uses an Affidavit of Affixation that
meets the statutory requirement of TCA Section 55-3-138.
G. Warranty Deed
A copy of the Warranty Deed (certified copy of recorded Warranty Deed if Manufactured Home)
to the subject residence must be provided to THDA in the Closed Loan Submission package.
7.6 CLOSING COSTS
Closing Costs and Fees a THDA Borrower May Pay
1. The borrower may pay any and all reasonable and customary fees and costs normally
charged in the market place. However, Section A., Page 2 of the Loan Estimate/Closing
Disclosure cannot exceed $1,400 for all Origination Charges. If THDA, in its sole
discretion, determines that the borrower has been charged a fee that is exorbitant or not
customarily charged in the market place, the Originating Agent will be required to refund
these fees to the borrower.
THDA Originating Agents Guide Page 42 Revised 07/01/2020
2. Origination Fee
No origination fee may be charged to the borrower or seller by the lender.
3. THDA allows the Originating Agent to charge normal and customary fees, including
without limitations, appropriate application fee. If the Originating Agent elects to charge
the Application Fee, it must be included on the LE and CD.
7.7 USE OF MERS SYSTEM
Originating Agents who are MERS members, in good standing, may use loan documentation
showing Mortgage Electronic Registration Systems, Inc., as the nominee for Originating Agent and
Originating Agent's successors and assigns for THDA loans closed on or after July 1, 2006. The THDA
loan number must be reflected on all THDA loan documentation in addition to the use of the Mortgage
Identification Number (MIN) as may be assigned and required by MERS.
Originating Agents shall cause each deed of trust (with THDA Rider) securing a THDA loan to be
properly recorded in the Register's Office of the county in which the property is located and to register such
deeds of trust with MERS in accordance with applicable MERS requirements. Originating Agent may sell
servicing rights to THDA loans registered with MERS only to THDA approved Servicers who are also
MERS members in good standing.
Originating Agent shall, upon THDA's request, obtain and properly record an assignment of any
MERS registered THDA loan from MERS to THDA or as THDA may direct. In the event of any dispute
regarding a THDA loan registered with MERS, Originating Agent shall take all steps deemed necessary by
THDA to protect THDA's interest. All other requirements of this Guide and of the Working Agreement
between THDA and Originating Agent shall apply to each THDA loan regardless of registration with
MERS.
Great Choice Plus second mortgage loans should also utilize the MERS system to assign loans to
THDA. THDA Second Mortgage loans and GC 97 loan do not need to have the THDA Rider recorded.
THDA Originating Agents Guide Page 43 Revised 07/01/2020
SECTION 8: SHIPPING A CLOSED THDA LOAN
8.1 OVERVIEW
A. Originating Agent Obligations
Originating Agents must conform to strict time tables when shipping a closed loan file to THDA
and to the THDA Servicer. The THDA Closed Loan Transmittal lists the documents that must be provided
to THDA with each closed loan file.
In order to avoid potential problems in complying with THDA timeliness guidelines and the
resulting fees for such, upon receipt of the closed loan file from the Settlement Agent, Originating Agents
are strongly encouraged to:
1. Audit all documents for accuracy,
2. Immediately secure any necessary corrections,
3. Promptly submit required documents to the THDA Servicer indicated on the Commitment
to facilitate timely notification to the Borrower in preparation for the first scheduled loan
payment,
4. Submit all information and materials required to obtain insurance or guarantee, and
5. Comply with THDA delivery deadlines.
B. Document Caption
Documents or files delivered to THDA must be clearly identified with the Originating Agent’s
name, the primary Borrower’s name, the THDA loan number, and the name and telephone number of the
Originating Agent’s contact person. When shipping follow-up documents after the initial closed loan file
has been delivered, Originating Agents must properly identify all documents being delivered. More than
one loan file may be delivered in each envelope; however, documents for each loan file must be clearly
identified.
C. Shipping Address
When delivering closed loan files and follow-up documents, specify “Single Family Programs
Division, Closing Department”. Documents delivered without “Single Family Programs Division” included
in the address may be misdirected or lost.
8.2 DELIVERY DEADLINES
Delivery of all THDA closed loan files must conform to the following deadlines:
1. 10 Day Deadline
For all THDA loans, THDA must receive the THDA Closed Loan Transmittal, the original
Notes, per diem interest (if applicable), and all other required initial submission
documentation regardless of type or source of funding, within ten (10) calendar days
following closing.
2. 120 Day Deadline
THDA must be in receipt of all necessary documentation, including the recorded Deed of
Trust, Assignment for the first and second mortgage loans (n/a if MERS documents
submitted), Title Insurance Policy, final
THDA Originating Agents Guide Page 44 Revised 10/09/2018
inspections and insuring or guarantee certificate within 120 days of closing, on all THDA
loans.
THDA may grant one extension, for a period not to exceed thirty (30) calendar days, to the
delivery deadline to allow for additional efforts to resolve the problems. THDA may
consider additional extensions. Any additional extensions must be approved by THDA, in
THDA’s sole discretion.
THDA may decide to complete a file without all final corrections being received. In those
cases, the Originating Agent would receive notification from THDA of the correction(s) to
be made and the Originating Agent will be responsible for completion of the file.
8.3 FAILURE TO MEET DELIVERY DEADLINES
Any loan closing file remaining incomplete on the 151st day following closing, regardless of
extension status and/or file documentation status, will result in THDA issuing a demand for repurchase,
along with repurchase instructions and deadline, without any further notice to the Originating Agent, unless
a further extension was granted by THDA. If the loan has not yet been purchased by THDA, it will
immediately become ineligible for purchase on the 151st day following closing, unless a further extension
was granted by THDA. Loans declared ineligible for purchase by THDA, including Great Choice Plus loans
and/or loans repurchased from THDA, are not eligible for subsequent purchase by THDA.
THDA may require Originating Agents who submit loans closed by the Purchase Method and do
not comply with delivery deadlines to submit all final documents before their loans will be eligible for
purchase by THDA.
Originating Agents who consistently fail to meet delivery deadlines will be suspended from new
loan originating until such time that the delinquent loan closings are completed.
8.4 REQUIRED DOCUMENTS FOR A COMPLETE CLOSED LOAN FILE
A. Closed Loan Submission Checklist
A completed THDA Closed Loan Submission Checklist must be used as the cover sheet when
submitting closed loan files to THDA. See Section 9 for detailed instructions.
B. Request for Loan Purchase with Acknowledgement and Certification
For loans closed by the Purchase Method, execute this form and enclose in the order indicated on
the Closed Loan Submission form. See Section 9 for detailed instructions.
THDA Originating Agents Guide Page 45 Revised 07/01/2020
Loans closed by the Purchase Method, if approved by THDA, will be purchased from the
Originating Agent by wire transfer. A loan is eligible for purchase when the initial closed loan package,
which must include the following documents, has been delivered to THDA.
Original Note on Great Choice
Original Note on Great Choice Plus loan, if applicable
Copy of executed Deeds of Trust
Title Insurance Commitment
Copy of executed Warranty Deeds
Declaration page of Hazard Insurance
Closing Disclosure
Copy of Legally Enforceable Obligation Letter, FHA loans only
VVOE
C. Commitment
Enclose a copy of the Commitment.
D. Original Note
Deliver the original Note(s), endorsed to THDA by an authorized Originating Agent staff member.
THDA will not fund the purchase of the loan until the original note is received.
E. Deed of Trust
Enclose the original recorded Deed(s) of Trust and Rider(s), or a copy (before recording) of the
fully executed Deed(s) of Trust and Rider(s) which have been certified as a true and exact copy by the
Settlement Agent or an authorized Originating Agent staff member.
THDA must receive the original recorded Deed(s) of Trust and Rider(s) on or before the 120 day
deadline. Applicant’s signature and typed name on the Deed(s) of Trust, Title Insurance Policy and
Warranty Deed(s) must match exactly or a name affidavit must be enclosed. The legal description, book,
page, time of recording and other critical data must match the Title Insurance Policy and the Warranty
Deed(s), as applicable.
F. Affidavit of Affixation (Manufactured Home)
Enclose the original, fully executed and recorded Affidavit of Affixation.
G. Assignment (n/a If MERS documents submitted)
Enclose the original recorded Assignment, or a copy (before recording) of the fully executed
Assignment which has been certified as a true and exact copy by an authorized Originating Agent staff
member.
THDA must receive the original recorded Assignment on or before the 120 day deadline. The
recorded Assignment must indicate the correct book and page reference for the recorded Deed(s) of Trust
and any subsequent re-recordings. The Title Insurance Policy or an endorsement must reflect the recording
and any subsequent re-recordings of the Assignment.
This includes Great Choice and Great Choice Plus Mortgage Loans.
H. Title Insurance Policy/Endorsements
Enclose the original Title Insurance Policy and all required endorsements. The original Title
Insurance Policy must be received by THDA on or before the 120 Day Deadline.
THDA Originating Agents Guide Page 46 Revised 07/01/2020
I. Warranty Deed
Enclose a copy (before recording) of the fully executed Warranty Deed(s) that convey(s) the
property to the Borrower. A copy of the recorded Warranty Deed(s) is/are required if a Manufactured Home.
J. Closing Disclosure
The Closed Loan Submission Package must include the Closing Disclosure (CD). The CD must be
included for Great Choice Plus second mortgage loans.
Great Choice Loan Allowable Fees
I. Great Choice Loan:
THDA allows the Originating Agent to charge normal and customary fees, including without
limitations, appropriate application fee. If the Originating Agent elects to charge an Application Fee, it must
be included on the CD. However, section A, page 2 of the loan estimate/closing disclosure cannot exceed
$1,400 for all Origination Charges. THDA does not allow origination points to be charged to the buyer or
seller.
II. Great Choice Plus Loan:
THDA only allows customary recording fees and odd days interest. THDA does not allow Lender
title policy on the Great Choice Plus loan. THDA Great Choice Plus loans are exempt from state stamp
taxes.
K. Hazard Insurance
THDA must receive a copy of the hazard insurance policy declarations page, or a copy of the
Certificate of Insurance, signed by an authorized agent of the insurance company. The original policy or
Certificate of Insurance must be sent to the THDA Servicer.
L. Termite Inspection/Treatment Certificate (when applicable)
See Section 7.4.C.
M. Flood Insurance (when applicable)
See Section 7.4.E.
N. Commitment Conditions
Enclose any documents to satisfy, at closing, conditions specified in the Commitment, if not
otherwise satisfied with documents listed above.
THDA Originating Agents Guide Page 47 Revised 06/11/2016
O. MIC/LGC; USDA/RD 3555-17, or As Applicable
1. The MIC must be ordered promptly after closing. FHA connections should reflect insured
and holder as THDA.
2. The LGC must be ordered promptly after closing. THDA must receive a copy of the LGC
within 120 days following closing.
3. For USDA/RD loans, enclose the Loan Note Guaranty 3555-17 within 120 days of closing.
Also enclose a copy of RD Form 3555-11, Lender Record Change. The original 3555-11
must be submitted to Rural Development. In the appropriate space, indicate THDA’s
USDA/RD ID number: 6206001445.
P. Final Loan Application (1003)
The final 1003 executed by the borrower(s) must be included in the Closed Loan Submission
Package.
8.5 LOAN REPURCHASE
A. Repurchase Obligation
THDA, in its sole discretion, may refuse to purchase any loan and may require an Originating
Agent to repurchase any loan(s) when any of the following exist:
1. Commitment conditions are not satisfied; or
2. The closed loan does not match all elements of the Commitment; or
3. The Originating Agent fails to deliver required documents to the THDA Servicer within
the THDA Servicer’s deadline; or
4. The loan is refused for servicing by the THDA Servicer; or
5. The Borrower fails to make the first regularly scheduled loan payment to the THDA
Servicer ("first payment default"); or
6. The Borrower experiences a first payment default before the MIC, LGC, USDA/RD
guarantee or PMI certificate is issued (first payment default is determined by the records
of the THDA Servicer indicated on the Commitment); or
7. An entity other than THDA or the Originating Agent is named on the MIC, LGC,
USDA/RD guarantee (3555-11, 3555-17 or 3555-18) or PMI Certificate;
8. The Originating Agent fails to deliver closed loan documentation to THDA within
specified deadlines; or
9. The loan cannot be insured or guaranteed within 150 days of loan closing or the THDA
closing file is incomplete on the 151st day following loan closing; or
10. Any material fact discovered subsequent to the closing causes the loan to be ineligible for
THDA financing.
THDA Originating Agents Guide Page 48 Revised 10/09/2018
An Originating Agent who fails to repurchase loans upon demand may be suspended from
submitting new loan applications to THDA, and THDA may pursue other remedies as specified in the
Working Agreement.
B. Repurchase Price
The amount necessary to repurchase a loan is:
1. The sum of the outstanding principal and interest on the Great Choice loan and the Great
Choice Plus loan, if applicable.
2. Monthly escrow adjustment.
In addition, if the Originating Agent is not the THDA Servicer, the repurchase price may include
reimbursement of the Service Release Fee to the THDA Servicer and a repurchase fee.
C. Repurchase Procedure
In the event THDA demands repurchase of a loan, the following procedures all apply:
1. The THDA Servicer will provide instructions for obtaining the repurchase price by a
certain deadline.
2. The Originating Agent must prepare an Assignment from THDA to the Originating Agent
and submit it to the THDA Servicer, who will forward the Assignment to THDA for
execution.
3. The Originating Agent must wire the required repurchase price to the THDA Servicer
according to instructions provided by the THDA Servicer.
4. Upon receipt of the repurchase price, THDA will sign and notarize the Assignment and
return it to the Originating Agent with the loan file.
5. After repurchase, THDA will reimburse Originating Agent for all principal and interest
received by THDA after the repurchase date.
Loans declared ineligible for purchase by THDA, and loans repurchased from THDA, are not
eligible for subsequent purchase by THDA.
8.6 SERVICING PROCEDURES
All loans shall be sold servicing-released to THDA dba Volunteer Mortgage Loan Servicing
(VMLS). VMLS servicing effective date is the THDA purchase date.
A. Service Release Premium
THDA will pay a Service Release Premium (SRP) in an amount equal to 1% of the loan amount.
Closed loan packages must be received and purchased prior to the first payment due date and meet the
delivery deadline described in Section 8.2 of the O. A. Guide. THDA will withhold the SRP amount from
the purchase price of the loan. THDA will pay the SRP for a loan once all documents as described in
section 7 of the O. A. Guide are received from the lender for that loan. The THDA prepared SRP report
will be emailed to the lender each week to the most recent email address THDA has in its files for each
lender. THDA will wire the SRP each week to the lender using the most recent wiring instructions THDA
has in its files for each lender. It is the lender’s obligation to ensure that email addresses and wiring
instructions are accurate and up to date.
THDA Originating Agents Guide Page 49 Revised 04/05/2018
D. Tax Service Fee
A $75 tax service fee must be charged on all loans. It can be paid by the borrower or lender and
must be reflected accurately on the Loan Estimate and Closing Disclosure. THDA deducts this amount
from the SRP and remits the tax service fee to CoreLogic.
E. Changing Fees/Compensation
Compensation and fees may be changed or eliminated at the discretion of THDA.
F. Tax and Insurance Escrow
The initial Escrow Account Disclosure statement must be completed accurately to be sure
sufficient funds are collected at closing. The initial escrow funds will be deducted from the purchase of
the loan.
G. Volunteer Mortgage Loan Servicing Directory
VMLS staff is available to answer any question Monday-Friday, 8am-5pm CST.
VMLS Customer Service: 844-865-7378
ADDRESSES:
Physical Address:
Volunteer Mortgage Loan Servicing
404 James Robertson Pkwy, Suite 1450
Nashville, TN 37219-1536
Payment Address:
Volunteer Mortgage Loan Servicing
PO Box 305170
Nashville, TN 37230-5170
Email Address:
Primary Escalation Contacts for VMLS
Servicing Managers: Trebia Johns, (615)649-3424
Heather Johnson, (615)649-3420
THDA Originating Agents Guide Page 49b 10/09/2018
H. Payments Received After Purchase
In the event the Originating Agent receives a mortgage payment AFTER THDA purchases the loan, the
payment is to be sent to VMLS immediately.
1. Email [email protected] indicating the amount received, the date received, and method
for transferring the payment in full to VMLS.
2. Payment can be mailed to the VMLS Physical Address
Volunteer Mortgage Loan Servicing
404 James Robertson Pkwy, Ste 1450
Nashville, TN 37219-1536
3. Or, payment can be wired with a confirmation email sent to [email protected].
G. Payments Received Prior to Purchase
If a payment is received PRIOR to THDA Purchase, the Originating Agent is to notify VMLS
immediately but retain the payment until THDA purchases the loan.
Email [email protected] indicating the amount received and the date received.
H. Service Transfer After First Payment Due Date
In the event the first payment becomes due prior to THDA purchasing the loan, the Originating
Agent is responsible for all servicing activities up to the THDA Purchase date and subsequent
Service Transfer Effective Date.
1. Collect timely payment from the borrower(s); proof of current due date will be required prior
to THDA Purchase
2. Disburse timely PMI/MIP payments to loan Insurer or Guarantor
3. Disburse additional Hazard Insurance, Flood Insurance, or Tax payments that come due prior
to the THDA Purchase date
4. Complete required Insurer or Guarantor monthly reporting, if applicable
5. Send a new Goodbye Letter meeting all RESPA requirements and coordinate the Service
Transfer effective date with VMLS
6. Immediately following the effective Service Transfer date, Originating Agent is to send the
following to VMLS
a. Loan History indicating due date, payments received, principal curtailments, suspense
balance, escrow disbursements, and escrow balance at transfer
b. All payments collected; disbursed escrow may be netted from funds transferred to VMLS
c. Copy of notices sent to borrower(s) including Goodbye Letter
d. Complete MERS TOB/TOS, if loan is active in MERS
THDA Originating Agents Guide Page 50 Revised 07/01/2020
SECTION 9: THDA FORMS AND INSTRUCTIONS
As a result of Tax Code requirements, THDA must require certain forms. Application files or closed
loan packages that do not contain fully executed THDA forms, as required, will not be accepted by THDA.
These forms must be included in THDA application files and in THDA closed loan packages as indicated
in this Guide. THDA forms are in addition to the typical forms utilized in the mortgage industry. These
forms are to be considered part of this Guide.
THDA forms may not be altered.
THDA forms may not be distributed to a lender who is not an Originating Agent or to any other
unauthorized individual or entity.
Detailed instructions for completion of each THDA form follows in the order that they are typically
encountered in the lending process:
Application Affidavit HO-0450 (03/11)
Veteran Exemption Application Affidavit HO-0460 (02/07)
Notice to Applicants Federal Recapture Requirements HO-0448 (07/17)
Seller Affidavit HO-0451 (09/99)
Buyer Profile HO-0439 (02/15)
Underwriting Submission Checklist HO-0549 (11/17)
Affidavit of Affixation HO-0453 (12/06)
Legally Enforceable Obligation Letter HO-0476
Closed Loan Submission Checklist HO-0541 (07/19)
THDA Rider HO-0440 (08/03)
Request for Loan Purchase with Acknowledgement and Certification HO-0444 (02/18)
APPLICATION AFFIDAVIT HO-0450 (03/11)
VETERAN EXEMPTION APPLICATION AFFIDAVIT HO-0460 (02/07) (If Applicable)
The Application Affidavit or Veteran Exemption Application Affidavit (if applicable Application
Affidavit must be executed by each applicant and non-qualifying spouse. The household income figure to
be provided in item #4 is the maximum allowable income for the size of the applicant’s household and
location of property. The acquisition cost figure for Great Choice is to be provided in item #5 is the
maximum THDA acquisition cost for the county in which the property is located. The original Application
Affidavit or Veteran Exemption Application Affidavit is required by THDA. All changes or whiteouts must
be initialed by the Applicant(s).
Each Application Affidavit or Veteran Exemption Application Affidavit, must be executed and
notarized within the State of Tennessee; however, in rare circumstances, an Application Affidavit or
Veteran Exemption Application Affidavit may be executed and notarized outside the State of Tennessee,
such as when a person is a member of the armed forces, is stationed outside the state and is unable to be
present while the application is being processed.
THDA Originating Agents Guide Page 51 Revised 11/01/2017
NOTICE TO APPLICANTS FEDERAL RECAPTURE REQUIREMENTS HO-0448 (07/17)
This form is mandatory for all THDA loan applications. The Applicant and all Co-Applicants must
sign and date the form at the time of application. Provide a copy to the Applicant. Enclose the original
signed and dated form in the application file when submitted for THDA underwriting.
SELLER AFFIDAVIT HO-0451 (09/99)
The seller of the property must complete a Seller Affidavit for each application file submitted to
THDA. The Seller Affidavit is to assist in determining whether the purchase of the property involves more
than the purchase price specified in the sales contract.
The seller must sign and date the Seller Affadavit, and it must be notarized. Enclose the original
Seller Affidavit in the application file when submitting for THDA underwriting. In the absence of the
original Affidavit at the time of loan approval, a prior to closing contingency will be THDA receipt of the
original.
BUYER PROFILE HO-0439 (02/15)
This form is critical to facilitate accurate reports by THDA. Complete this form accurately and
completely and enclose it with the application file when submitted for THDA underwriting.
UNDERWRITING SUBMISSION CHECKLIST HO-0549 (11/17)
Use this form as a cover sheet for all application files submitted to THDA.
Follow the checklist closely and complete all information. Items omitted may cause the application
file to be returned for completion and resubmission. Do not change the size of this form.
The checklist has five main sections:
1. General Information.
2. THDA Program Eligibility. Must include original documents, notarized as indicated.
3. Great Choice Plus Loans/Downpayment/Closing Cost Assistance. Must be documented as
indicated, if applicable.
4. Credit Package. Must include documentation, as indicated.
Originating Agent Information: Provide complete information, including the Originating Agent’s
four-digit O. A. Number as assigned by THDA. An omitted or incorrect Originating Agent number and
omitted or incorrect branch address are the primary causes of misdirected commitments and misdirected
funding checks.
Primary Applicant: Include primary Applicant’s name as it will appear on all documents. It must
be accurate and consistent.
Property Address: Must be accurate and consistent on all documents.
Submission Purpose: As indicated, this form may be used for purposes in addition to the initial
submission of an application file.
Program Type: Indicate the desired THDA loan program.
Loan Type: Indicate whether the loan type is FHA, VA, Conventional or USDA/RD.
Property Type: Indicate the correct property type. Check the appropriate block to indicate a
residence that is a single family detached or a condominium. Check “Other” and indicate in the blank
THDA Originating Agents Guide Page 52 Revised 07/01/2020
provided if the residence is a 2, 3 or 4 family home, or is a PUD, townhouse, zero lot line, modular or
manufactured home.
THDA Program Eligibility/Credit Package
A check mark, an “X” or “N/A” must be indicated for each document listed on the form. Refer to
Section 6.2 for additional information.
An Originating Agent staff member’s signature, printed or typed name and telephone number must
appear at the bottom of the checklist. Without this information, the file is considered incomplete. In
addition, if this information is omitted, THDA does not know who to call if questions arise.
AFFIDAVIT OF AFFIXATION HO-0453 (12/06)
An original Affidavit of Affixation is required on all manufactured home loans and must be
recorded as a separate document. It cannot be recorded with or attached to the Deed of Trust for recordation.
LEGALLY ENFORCEABLE OBLIGATION LETTER HO-0476
For any Great Choice loans insured by FHA/HUD the Originating Agent will receive a Legally
Enforceable Obligation Letter (LEOL) attached to the THDA Loan Commitment. HUD/FHA requires that
THDA provide a Legally Enforceable Obligation Letter when THDA has agreed to provide DPA funds in
the form of the Great Choice Plus loan. The Borrower(s) is to sign the LEOL at closing and a copy of the
executed LEOL must be sent back to THDA with the initial closing submission package in order for THDA
to purchase the Great choice Plus loan.
The Originating Agent is to retain the original LEOL in their loan file to accompany the FHA
insurance application associated with the first mortgage.
CLOSED LOAN SUBMISSION CHECKLIST HO-0541 (07.19)
Use this form when submitting all closed loan files to THDA, regardless of the source of funding.
This form can also be used as a checklist for submission of follow-up documentation. Complete all items
on this form. Do not change the size of this form.
THDA RIDER HO-0440 (08/03)
The THDA Rider must be completed, executed, attached to and recorded with the deed of trust for
all THDA first mortgage loans, regardless of loan type. The THDA Rider must be signed by all Borrowers
who are required to sign the first deed of trust and recorded with the deed of trust. THDA Rider is not
applicable for any THDA second mortgage loans or GC97 mortgage loans.
REQUEST FOR LOAN PURCHASE WITH ACKNOWLEDGEMENT AND CERTIFICATION
HO-0444 (02/18)
All loans closed by the Purchase Method must be accompanied by an executed Request For Loan
Purchase with Acknowledgement and Certification when delivered to THDA. The most recent version of
the HO-0444 form must be utilized. By submitting a loan file for purchase by THDA, each Originating
Agent is deemed to affirm the Acknowledgement and Certification appearing on the master form of the
Request For Loan Purchase with Acknowledgement and Certification with respect to each loan file
submitted regardless of whether the Acknowledgement and Certification is included with the form
submitted with a particular loan file.
THDA Originating Agents Guide Page 53 Revised 07/01/2020
Provide all information indicated. Check the appropriate box indicating whether the loan file is
complete in all respects or not. Sign and date where indicated, print name and title, and provide telephone
number. Omitted information may cause the loan file to be returned to the Originating Agent.